A year on from the credit crunch and it is difficult to overestimate the significance of the travails of the global financial services market. The lack of clarity that surrounds the immediate future for the global economy obscures the horizon for treasurers trying to plot the best course for their companies.
Like many of their senior colleagues, a lot of treasurers learnt their trade during the benign conditions of the so-called Nice (noninflationary constant expansion) decade. The Bank of England, which coined the term, is now warning of nastier times ahead. And few are
disagreeing. Any idea of reverting to the conditions prevailing before last summer’s market seizure seems universally discounted.
This month’s cover story tries to reflect the thoughts of the treasury profession and attempts to gauge the mood. There is a certain nervousness around and many corporates are unwilling to commit themselves too rashly to the public record. The Treasurer would like to thank all the treasurers who took part (even if only to say they couldn’t respond on the record) in our analysis of the first 12 months of the credit crunch.
Before the crunch a wall of liquidity was available for those who required it – and even for those that didn’t. That easy plenty has now turned to a drought. But it is possible to find oases of liquidity, and while the cost of borrowing has accelerated, it hasn’t, for certain blue chips at least, moved savagely higher.
The credit crunch has focused corporates’ attention on certain topics. Any non-treasurers who previously found cash management a little tedious will have discovered an absorbing interest in matters of security, liquidity and yield. What the lasting effect of this focus will be is hard to ascertain.
Meanwhile the treasury profession is to be congratulated on the way it has responded to the crisis. Treasurers have avoided panic, which seemed to grip the markets and the banking sector at times, and appear to be finding the tools and techniques to help corporates cope. While some other finance professionals – notably certain regulators and others in the banking industry – have not enhanced their reputation over the last year, treasurers are emerging as having cool heads and offering wise counsel.
One positive consequence of the credit crunch is clear: treasurers are proving that they are tough enough to manage when the going gets tough.
Peter Williams
Editor
See page 22, And the Storm Rages.
