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Cash & Liquidity Management
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Thriving in a Post-Crisis World

by David Manson, Head of Liquidity Management,  David Williams, Product Director, Liquidity Management, Hayley Sudbury, Head of Pricing, Liquidity Management, and Jonathan Church, Senior Product Manager, Liquidity Management,  Barclays Corporate

Barclays has long been a name synonymous with quality, reliability and customer service. With the recent reorganisation of the business, we have the ability to enhance the services we provide to clients even further, delivering the expertise, products, services and international reach that they require. Alongside key business streams in the Barclays Group including Retail Banking, Barclays Capital and Barclays Wealth, the newly created Barclays Corporate, headed by John Winter, provides the full range of capabilities required by corporates with turnover of more than £5m, including distribution and sales, product management and infrastructure. One of the major product groups within Barclays Corporate is Cash and Trade, which sits alongside other debt, FX, investment and related services. This area now has a broader international remit and we are investing significantly to provide industry-leading services solutions at a global level. In this article, we look at some of the current industry trends we are witnessing and the innovative ways in which Barclays Corporate is supporting our clients’ evolving needs.

The focus on working capital

Although the financial crisis is now easing for most business sectors, some of the implications have been far-reaching and are likely to affect the markets for some time to come. For example, the problem of availability and cost of financing is encouraging treasurers to optimise the use of cash within the business, leveraging surpluses in some parts of the business to fund deficits in another, reducing the reliance on external financing. With pressure continuing in the wholesale funding market, working capital efficiency and liquidity management remains important for every company. We are supporting our clients in taking an holistic view across debt, cash management and investment to build up an individual picture of their cash needs and how best to optimise their financial position.

A changing regulatory environment

Post credit crisis, it is no longer clear how all banks will be able to satisfy their clients’ funding needs in the future. Every bank is going through changing and challenging times. With the regulatory obligation to satisfy new capital requirements and hold a capital liquidity buffer in case of named events, the banking environment in which we are now operating would have been inconceivable two years ago. Although banks will of course comply with new regulatory requirements, they are likely to interpret and implement these in different ways. Significant factors such as how to pay for this increased capital requirement will affect how banks operate and their future offering to customers. In every case, banks will need to find a competitive business model, whilst remaining compliant.

Balancing yield with security

The implications of new regulations are not just limited to financing, but also extend to cash management and investment. The central and traditional tenets of investment: security; liquidity and yield, are principles that have returned to the fore for those in corporate treasuries. Two years ago, security and liquidity were considered less significant than yield. The crisis reversed this to a large degree and in the future, we expect more businesses to take a more balanced view of these factors. Banks that clearly align their liquidity management offering to these principles are those that are best positioned for future growth. When they are out of balance, for example if clients are offered higher yields relative to the tenor, corporate treasurers will increasingly question the credit quality of the bank and look more closely at the balance sheet.