LONDON—GlaxoSmithKline PLC has been funneling cash back to the U.K. daily from banks in euro-zone countries as part of its strategy to reduce exposure to risks of a possible breakdown of the European monetary system.
"We don't leave any cash in most European countries," Chief Executive Andrew Witty said.
"We sweep all of our cash raised during the day out of the local banks and send it to banks here in the U.K. which we think are robust and secure," Mr. Witty said, adding: "We've been doing this since early last year and will continue doing so."
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"Glaxo, the U.K.'s biggest drug maker by sales has also been working hard to reduce the payment arrears owed it by health-care institutions and governments in the euro zone.
"It's not alone. Other drug companies in Europe have also taken steps to claw back money owed them, notably by Greece and Spain, which are struggling to repay billions of euros in outstanding debts to the health-care sector. Some companies now use their sales forces as debt collectors.
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"Asked why the company began this method of mitigating risk, Mr. Witty said, "There was a period where things looked more worrying. The action that the [European Central Bank] took over the last six months has clearly had a very positive effect on bank liquidity and confidence. But there was a period last year where every day you were getting a phone call about Bank A, B or C which was perceived to be about to go or that there were risks. And we did a very comprehensive review about which banks we thought were the strongest and which weren't. We moved our cash accordingly. It wasn't necessarily billions every day. It's more in the order of tens of millions. And mostly the euro zone."
Keep reading: Glaxo Has Been Repatriating Euro-Zone Cash – WSJ.com.
