Liquidity management debate: Learn more about the panelists
Transaction banking services: Special Sibos section
Jack Large Let’s start with a little background on how this part of the industry has developed in the past couple of years. David?
Over recent years the trend had been for corporates to concentrate with just one or two banks either globally or, more usually, per region. The crisis has reversed that trend as corporates now feel a need for diversification. So consolidation, driven by the desire for better returns and consistent standards, has been replaced by a focus on counterparty management and risk spreading. From the banks’ perspective, products have to reflect clients’ activities and needs. The prevailing principle is to give the clients visibility and control and then to help optimize liquidity.
Exactly. The crisis created a situation in which the availability of credit dropped and the price rose dramatically; this drove clients to tap the cash within their own organizations as a source of funding by recycling cash from cash-positive parts of the organization into the cash-negative parts.