Survey finds US treasurers still value bank relationships

Bank relationships matter for US corporate treasury and finance professionals, according to the latest responses canvassed by the Association for Financial Professionals (AFP).

According to its just-released 2016 Liquidity Survey, underwritten by State Street Global Advisors (SSGA), the AFP, which is based near Washington DC, reports that 90% of treasury and finance professionals cite their overall relationship with their bank as an important determinant when choosing a bank in which to invest their short-term cash. Survey results were drawn from 787 respondents.

This is the first time since the AFP launched the liquidity survey 11 years ago that finance professionals have indicated their relationship with their bank plays a more important role when selecting their banking partner than the bank’s credit ratings, signalling a stronger confidence in the banking industry.

In addition, 85% of survey respondents cited banks as resources their organisations use to access information about operating cash and short-term investment holdings; a further sign of confidence in their banking partners.

Other key findings in the 2016 survey include:
• Seventy-one percent of organisations with cash and short-term investment holdings outside the US maintain most of their holdings in bank-type investments, including certificate of deposits and time deposits.
• Fifty-five percent of corporate cash holdings are maintained at banks.
• Safety of principal continues to be the top priority among investment objectives. The share of US treasury and finance professionals reporting safety as a top objective increased from 65% in 2015 to 68% this year. This is followed by liquidity, while yield continues to be a distant third.
• With the US Securities and Exchange Commission (SEC) ruling on money funds taking affect this October, 62% of survey respondents plan to make changes in how they invest in prime funds.

“Bank relationships continue to grow in level of strategic importance for organizations,” said Jim Kaitz, AFP’s president and chief executive officer (CEO). “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 [MMFs] held by organisations.”

Yeng Felipe Butler, head of SSGA’s global cash business commented: “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 organisations as they navigate this period of change.”


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