Cash & Liquidity Management
Published  7 MIN READ
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From Provider to Partner: Getting More for Your Money

From Provider to Partner: Getting More for Your Money

by Alex Manson, Group Head, Transaction Banking, Standard Chartered Bank

Changing market and regulatory conditions, and new treasury requirements amongst corporations in Asia, are having a wide variety of implications, not least the change in relationship between corporate treasurers and their banking partners. The ramifications of this shift are considerable, not only in the number and selection of banks that a corporation may choose to work with, but the way in which these relationships are structured, and across the full spectrum of banking services.

The challenges of cash investment

Traditionally, Asian corporate have never held as much large amounts of cash on their balance sheets as they do today. Today, however, strong performance and continued geographic expansion both regionally and globally have led to an increase in surplus cash. Furthermore, ongoing political and economic volatility in many parts of the world is leading many corporations to conclude that a comfortable cash buffer might be the most prudent course of action. For treasurers that have focused historically on cash, liquidity and risk management, the need to manage cash investments creates both new opportunities and challenges.

Some of the challenges associated with managing surplus cash are common to treasury practitioners worldwide, specifically the difficulty in finding appropriate repositories for accumulated earnings in an environment where liquidity is plentiful amidst quantitative easing and low interest rates. Placing surplus cash with banks is becoming increasingly uneconomic. With low (or negative) central bank rates, and with changing regulatory demands on banks (of which more below), some are charging to take deposits. For treasurers, and the boards to which they are accountable, paying for the privilege of giving cash to a bank for ‘safe’-keeping is difficult to justify.