Safety, Liquidity Are Priorities Even as Marketplace Shows Signs of
PROVIDENCE, R.I.--(BUSINESS WIRE)--
Short-term corporate cash continues to move increasingly toward banks,
with bank deposits now accounting for 52 percent – the largest
percentage ever – of short-term corporate investment balances, according
to data released today by the Association for Financial Professionals
(AFP) and underwritten by RBS Citizens.
Bank deposits continue to grow for three key reasons: few alternatives
exist with any yield; companies are uncertain about future changes in
money market funds; and many banks allow corporate customers to defray
service fees through Earnings Credit Rates (ECRs) on large cash
holdings, according to the AFP Liquidity Survey, now in its ninth
year and gathering data from 740 respondents.
Despite a slow economic recovery, 36 percent of companies reported
higher cash reserves in the last year and among those that increased
cash holdings, a full 73 percent indicated that bigger reserves were due
to better operating cash flows.
“There are definitely signs that could be indicating change and rising
optimism in the marketplace,” said Matt Richardson, SVP, RBS Citizens
Treasury Solutions. “We support our clients by offering an array of
deposit products and the latest technological solutions to meet their
treasury needs with our ‘access’ suite of products. Our bankers are
working every day to bring great ideas to the table so clients can make
the most of opportunities during these changing times.”
Safety and liquidity continue to be the priorities among survey
respondents at 68 percent and 28 percent, respectively. As long as yield
remains scarce in the marketplace it remains a very distant third.
Fewer than a quarter of survey respondents reduced reserves, which they
mainly used for capital expenditures (43 percent), retiring debt (28
percent), acquisitions and launches of new businesses (20 percent), or
stock repurchases or dividends (20 percent).
“The pace of economic recovery is the determinant of cash decisions,”
said Jim Kaitz, AFP’s president and CEO. "We see corporate cash piles
remaining in traditional vehicles until business prospects significantly
improve or short-term rates inch up."
About Citizens Financial Group Inc.
Citizens Financial Group Inc. is one of the nation’s oldest and largest
financial institutions, with $126.9 billion in assets as of March 31,
2014. Headquartered in Providence, Rhode Island, the company offers a
broad range of retail and commercial banking products and services to
individuals, small businesses, middle-market companies, large
corporations and institutions. Consumer Banking helps its retail
customers “bank better” with mobile and online banking, a 24/7 customer
contact center and the convenience of approximately 3,100 ATMs and
approximately 1,200 Citizens Bank and Charter One branches in 11 states
in the New England, Mid-Atlantic and Midwest regions. Citizens also
provides mortgage lending, auto lending, student lending and commercial
banking services in selective markets nationwide. In Commercial Banking,
Citizens offers corporate, institutional and not-for-profit clients a
full range of wholesale banking products and services including lending
and deposits, capital markets, treasury services, foreign exchange and
interest hedging, leasing and asset finance, specialty finance and trade
Citizens operates via subsidiaries Citizens Bank, N.A., and Citizens
Bank of Pennsylvania. Additional information about Citizens and its full
line of products and services can be found at www.citizensbank.com.
Headquartered outside Washington, D.C., the Association for Financial
Professionals (AFP) is the professional society that represents finance
executives globally. AFP established and administers the Certified
Treasury Professional and Certified Corporate FP&A Professional
credentials, which set standards of excellence in finance. The quarterly
AFP Corporate Cash Indicators serve as a bellwether of economic growth.
The AFP Annual Conference is the largest networking event for corporate
finance professionals in the world.
AFP, Association for Financial Professionals, Certified Treasury
Professional, and Certified Corporate Financial Planning & Analysis
Professional are registered trademarks of the Association for Financial
Citizens Financial Group Inc.
Frank Quaratiello, 617-725-5851
Source: Citizens Financial Group Inc.