Corporate cash and liquid investments survey 2014


8 September 2014, London

In July and August 2014 the ACT conducted a survey of treasurers to ask about plans for holdings of cash.

Three key survey results:

  • 72% of corporate treasurers say their firms have plans to use balance sheet cash
  • 18% of respondents say their company has plans to run down cash aggressively
  • 43% expect to hold more cash than in the past given continuing uncertainties

Colin Tyler, ACT Chief Executive commented:

 Sensibly, companies everywhere increased cash holdings during the financial crisis and its aftermath and the early stages of the crisis in the Eurozone. But it is a welcome sign of recovery of confidence that almost three quarters of treasurers expect to see those balances running down. Given the consequences of the crisis for the banks and the new financial services legislation, it is not surprising that more than 40% of firms expect, prudently, to end up holding more cash than they used to. The ACT remains concerned that managing liquidity prudently and cost effectively is becoming more challenging as structural changes to banks and money market funds take hold. Treasurers and their boards should remain vigilant. 

Survey highlights include:

  • The main factors that may encourage them to hold even less cash would be:

    • Higher or (sustained) lower/negative interest rates
    • Greater access to committed borrowing facilities
    • Greater concern over where to invest cash held
  • And encouraging even more cash holdings would be:
    • Increased political and economic uncertainties
    • Regulation or other factors further reducing banks’ lending capacities
  • Reasons for the build-up of cash in recent years were overwhelmingly prudence in the view of the increased uncertainties
  • Firms have responded to the changes in banks by diversifying the institutions they deal with both as sources of funds (41%) as counterparties for transactions and takers of companies’ cash deposits (49%) and by diversifying cash away from bank deposits to other investments.

Corporate Cash and Liquid Investments Sept 2014

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