RBS: Short-term corporate cash mostly held in banks

PROVIDENCE – Short-term corporate cash is increasingly being held in banks, with banks deposits now accounting for 52 percent – the largest percentage ever – of short-term corporate investment balances, according to a study by the Association for Financial Professionals, underwritten by RBS Citizens.
“The pace of economic recovery is the determinant of cash decisions,” said Jim Kaitz, president and CEO of the Association for Financial Professionals, in releasing the findings of the AFP Liquidity Survey in mid-July.
“We see corporate cash piles remaining in traditional vehicles until business prospects significantly improve or short-term rates inch up,” said Kaitz.
The study found that bank deposits continue to grow for three reasons – few alternatives exist with any yield, companies are uncertain about future changes in money market funds and many banks allow corporate customers to defray service fees through Earnings Credit Rates on large cash holdings, according to the survey, which collected data from 740 respondents.

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