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TREASURY

Cash yields: Corporates keep it simple as rates rise

Simplicity remains the watchword for treasurers trying to increase returns on their cash reserves in the face of rising inflation and still-low deposit rates.

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Cash on US corporate balance sheets has more than tripled since the early 2000s. Despite a recent fall in cash levels, European companies remain under pressure to use their cash to mitigate the effect of rising prices.

At Deutsche Bank, this has translated into increasing demand for creative solutions when deploying short-term cash, with corporates reviewing their investment policies to facilitate instruments beyond the traditional safe havens of bank deposits.

Short term and riskless is the usual approach, with bank deposits the preferred option
Christian Seguineau, Societe Generale
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There has also been increased demand to further improve and enhance the process of excess cash centralization through cash-pool automation and virtual accounts.

Jan-Philipp Gillmann, global head of client coverage at Deutsche Bank, explains that demand for government bonds from corporate clients has largely remained stable.

“In the corporate bond market, we have seen an increase in activity from corporate clients in an effort to secure increased short-term yields for their available liquidity,” he says.