US Multinationals Look to Treasury Rationalisation

This will see them progress on the path towards centralisation in 2015, leveraging, for example, their recent implementation of the SEPA regulation.  With SEPA, single account solutions – which use Payments-On-Behalf-Of and Collections-On-Behalf-Of structures through an in-house bank – have gone from theory or small scale to become the new best practice in European cash management.  

US blue chips are also cash rich, and their treasurers are approaching their banks for yield and, more importantly, to protect their cash so they can use it to invest appropriately – whether for their European operations or elsewhere.

However, Basel III’s Liquidity Coverage Ratio (LCR), which takes effect in 2015, means that corporates will have to hold their non-operational cash with banks for at least 30 days to ensure yield.

Deposit “stickiness” will therefore become more formally defined, and new account types will reflect the LCR requirement. For instance, “notice accounts” are likely to set an important precedent, introducing a stricter trade-off between liquidity and yield.

Banks are already advising their clients on how to navigate and benefit from all the regulation that has come into effect, and this will continue into 2015. And the same goes for US corporates operating in Europe.


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Dominic Mac