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Cash & Liquidity Management
Published  7 MIN READ
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A New Outlook on Cash

by Rohan Ryan, Head of North America Liquidity Product Solutions Specialists, Bank of America Merrill Lynch Global Transaction Services

A strengthening macro-economic backdrop and the introduction of Basel III, which reduces the value of some types of corporations’ cash to banks, are prompting corporations to rethink how they optimise cash and manage the challenges resulting from the changing environment.

After the long cold winter of the credit crisis when corporates hoarded cash, a thaw has begun to take place. Companies want to do more with their cash as the global economy gradually improves and the threat of financial unrest recedes. Cash is once again being redeployed in traditional ways to take advantage of an evolving global economy.

For example, some companies are using cash for mergers and acquisitions (M&A): activity globally is expected to rise in 2013. Other firms are increasing dividends, with some beginning payouts for the first time. Additionally, corporations are seeking a better return on their cash from non-strategic investments. Options including bank deposits or cash equivalents, such as money market funds (MMFs), offer diversification and liquidity; however, there may be disappointment in store.