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Amid Market Changes, Treasurers Lean On Their Banks


Treasurers take their relationship with the bank seriously. New research finds that nearly all corporate treasurers agree that their relationship with financial institutions is a key factor in determining which bank to work with and where to invest short-term cash.

The findings were detailed in the latest 2016 AFP Liquidity Survey, underwritten by State Street Global Advisors (SSGA). The report was published on Tuesday (July 12).

Researchers found that 90 percent of treasurers and corporate finance professionals cite their relationship with the bank as the top factor behind their decision to choose where to invest corporate funds. According to reports, this is the first time in the report’s 11-year history that treasurers say their relationship with the bank is more important than the bank’s credit ratings when making this decision.

Analysts said this finding signals “a stronger confidence in the banking industry.”

Further, 85 percent of those surveyed said their bank was their go-to resource when seeking information about short-term investment holdings and operating cash, reports said, with analysts pointing to this statistic as more evidence of the rising confidence these professionals have in traditional financial institutions.

More than half (55 percent) of corporate cash holdings are kept at banks, the report found.

“Bank relationships continue to grow in level of strategic importance for organizations,” said AFP CEO and President Jim Kaitz in a statement. “Bank deposits continue to hold the majority of corporate cash and short-term investments, and banks also play a role as sponsor of both onshore and offshore money market funds held by organizations.”

In a separate statement, the head of SSGA’s Global Cash business, Yeng Felipe Butler, said the survey offers insight at a crucial point in the industry.

“The second half of 2016 may prove to be one of the most challenging periods in the industry’s history, and we are eager and ready to support treasurers and their organizations as they navigate this period of change.”

Researchers additionally found that treasurers are gearing up for some of this change later this year when the Securities and Exchange Commission ruling on money funds takes effect in October; 62 percent of treasurers said this ruling will change how they invest in prime funds, reports said.


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