Share of Corporate Cash Held in Bank Deposits Rises to New High, Survey Finds

Safety, Liquidity Are Priorities Even as Marketplace Shows Signs of Optimism

PROVIDENCE, R.I.--()--Short-term corporate cash continues to move increasingly toward banks, with bank deposits now accounting for 52 percent – the largest percentage ever – of short-term corporate investment balances, according to data released today by the Association for Financial Professionals (AFP) and underwritten by RBS Citizens.

Bank deposits continue to grow for three key 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 (ECRs) on large cash holdings, according to the AFP Liquidity Survey, now in its ninth year and gathering data from 740 respondents.

Despite a slow economic recovery, 36 percent of companies reported higher cash reserves in the last year and among those that increased cash holdings, a full 73 percent indicated that bigger reserves were due to better operating cash flows.

“There are definitely signs that could be indicating change and rising optimism in the marketplace,” said Matt Richardson, SVP, RBS Citizens Treasury Solutions. “We support our clients by offering an array of deposit products and the latest technological solutions to meet their treasury needs with our ‘access’ suite of products. Our bankers are working every day to bring great ideas to the table so clients can make the most of opportunities during these changing times.”

Safety and liquidity continue to be the priorities among survey respondents at 68 percent and 28 percent, respectively. As long as yield remains scarce in the marketplace it remains a very distant third.

Fewer than a quarter of survey respondents reduced reserves, which they mainly used for capital expenditures (43 percent), retiring debt (28 percent), acquisitions and launches of new businesses (20 percent), or stock repurchases or dividends (20 percent).

“The pace of economic recovery is the determinant of cash decisions,” said Jim Kaitz, AFP’s president and CEO. "We see corporate cash piles remaining in traditional vehicles until business prospects significantly improve or short-term rates inch up."

About Citizens Financial Group Inc.

Citizens Financial Group Inc. is one of the nation’s oldest and largest financial institutions, with $126.9 billion in assets as of March 31, 2014. Headquartered in Providence, Rhode Island, the company offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Consumer Banking helps its retail customers “bank better” with mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,100 ATMs and approximately 1,200 Citizens Bank and Charter One branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Citizens also provides mortgage lending, auto lending, student lending and commercial banking services in selective markets nationwide. In Commercial Banking, Citizens offers corporate, institutional and not-for-profit clients a full range of wholesale banking products and services including lending and deposits, capital markets, treasury services, foreign exchange and interest hedging, leasing and asset finance, specialty finance and trade finance.

Citizens operates via subsidiaries Citizens Bank, N.A., and Citizens Bank of Pennsylvania. Additional information about Citizens and its full line of products and services can be found at www.citizensbank.com.

About AFP

Headquartered outside Washington, D.C., the Association for Financial Professionals (AFP) is the professional society that represents finance executives globally. AFP established and administers the Certified Treasury Professional and Certified Corporate FP&A Professional credentials, which set standards of excellence in finance. The quarterly AFP Corporate Cash Indicators serve as a bellwether of economic growth. The AFP Annual Conference is the largest networking event for corporate finance professionals in the world.

AFP, Association for Financial Professionals, Certified Treasury Professional, and Certified Corporate Financial Planning & Analysis Professional are registered trademarks of the Association for Financial Professionals.

Contacts

Citizens Financial Group Inc.
Frank Quaratiello, 617-725-5851

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Contacts

Citizens Financial Group Inc.
Frank Quaratiello, 617-725-5851