UK corporate cash declined to £737bn (US$1.149 trillion) in the first quarter of 2012, according to figures issued by the Office of National Statistics (ONS). The figure represents a fall of more than 2% from Q411 when historically high cash reserves were reported for large corporates, with smaller firms struggling.
According to Anthony Carfang, a partner at treasury and liquidity consulting firm Treasury Strategies, corporate cash has followed a similar pattern across the UK, the eurozone and the US since the onset of the financial crisis in 2007-08. It has increased by 10% in the UK and the eurozone and by 14% in the US. In each case, cash is tracking closely with the local gross domestic product (GDP).
“However, the same can’t be said for bank reserves in these three regions,” said Carfang. “US bank reserves have been at 10% of GDP for the past year, reflecting the high levels of stimulus and quantitative easing. Stimulus in the UK is catching up, rising from 6% of GDP to 10% over the past year. Lagging the group, eurozone bank reserves stood at only 2% of eurozone GDP a year ago and are now approaching 8%.”
Separately, the Bank of England (BoE) said that UK banks should feel free to tap into their hefty cash piles to keep lending flowing to businesses, after final GDP figures for Q112 confirmed that the British economy has entered its second recession in four years.
The BoE’s financial policy committee (FPC) commented that banks had substantial reserves of short-term cash set away for market shocks, although it added that they should still be ready to forego paying as much in bonuses and dividends to build up longer-term capital buffers.
The top five sectors Asian fintech investors are interested in are data analytics, blockchain, lending, payments and regtech, according to Gary Hwa, EY regional managing partner.
On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.
Kicking off day two of the Singapore Fintech Festival, Deloitte Chairman David Cruikshank said that fintech is significant for three reasons. First, customer expectations of services are higher than ever. Second, barriers to entry are lower than before. And finally, financial institutions (FIs) face a threat of what a competitor might do.
The EU and US’ shift in accounting standards may bring balance sheet losses and increase credit risk, according to James Elder, director of risk services at Standard & Poor’s (S&P) Global.