GlaxoSmithKline ($GSK) executives like to sleep well at night, not wake up worrying about a banking crisis. So, the company transfers millions of euros every day into U.K. bank accounts to keep cash out of fragile countries. Since early last year, GSK has been moving its money into Britain this way on a daily basis, CEO Andrew Witty (photo) said.
"We don't leave any cash in most European countries," Witty said in conjunction with yesterday's earnings announcement. "We sweep any cash we raise during the day out of local banks into banks we think are robust and secure." He didn't name those "robust and secure" banks, but he did say he feels comfortable stashing cash in a few eurozone countries, namely Germany.
GSK has also been working to reduce another risk of doing business in Southern Europe these days: bill collections. Over the past two years, GSK has put "a huge focus on getting paid" by the hospitals it supplies in Mediterranean countries, Witty explained. That focus has enabled the company to reduce its receivables in the region.
After outlining GSK's risk-management strategies, Witty emphasized he believes things are looking up in Europe. The European Central Bank has had "a very positive effect on bank liquidity and confidence," he said. GSK is continuing to repatriate cash "just in case," he said. "I just don't think we are one step away from the end of the world," Witty maintained.