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10TH ANNUAL GLOBAL CASH MANAGEMENT SURVEY

Feb 04, 2009

London, 4th February 2009: J.P. Morgan Asset Management has revealed the emerging trends from its tenth annual Global Cash Management Survey, carried out in conjunction with The Association of Corporate Treasurers (ACT). The survey collates the key concerns for treasurers around the globe.

The Survey revealed, given the events of last year, that there is growing concern over the risk and quality of credit. These have replaced last year's key concern of treasury departments over the accuracy of cash forecasting. As funding questions loom globally, treasurers have also increased their focus on liquidity and managing cash positions, reflected in the fact that they are expanding the overall number of banking relationships they maintain.

Rising risk aversion: Unsurprisingly, following a tumultuous 2008 in money markets, a key concern of treasury departments was their increased aversion to risk and the credit crisis. This is in stark contrast to last year's key concern, accurate cash forecasting, which received just 10% of the vote this year.

Foreign exchange risk, though, was named by 43% of respondents as the key concern for the coming year. Kathleen Hughes, Head of Global Liquidity EMEA at J.P. Morgan Asset Management commented: "This is clearly a reflection of the dramatic currency movements witnessed in recent months and also the extreme uncertainty over global interest rates seen in the summer of 2008, when central banks seemed to be treading the finest of paths between the devil of higher inflation on one side and the deep blue sea of slowing growth on the other."

Banking relationships: Last year's survey revealed, for the first time, a gradual trend towards a greater number of banking relationships with the majority either increasing their relationships or keeping them the same. This is likely to be as a result of a number of high-profile bank collapses which, in turn, has prompted cash managers to spread their net wider to diversify risk.

Hughes commented: "While the increase in government guarantees for cash deposits has undoubtedly provided some measure of reassurance, treasurers are unlikely to want to risk the liquidity problems that would ensue if they were forced to wait in order to claim their money back from regulators."

Flight to quality 
These concerns over risk have clearly led to an increased focus on security with survey responses reflecting the 'flight to quality' that we have seen in markets this year. J.P. Morgan Asset Management is a first hand witness to this shift, having seen assets under management grow by 67% from December 2007 to December 2008 making it the largest global provider of 'AAA' rated money market funds with a 31% market share.

Almost half of those surveyed said they had significantly changed their approach to credit ratings and counterparty risk in 2008, in response to the credit crisis. While 32% of respondents in 2007 monitored credit ratings only at the point of investment, 81% of respondents now perform regular scheduled reviews. The number able to use sub-investment grade assets has also dwindled to almost zero.

Focus on yield: Despite big concerns over risk, the survey also revealed that treasurers were continuing to target high yields, and were more willing to take on additional duration risk to reach these targets.

The future for cash management
It seems, given the credit crisis and its effect on risk, that most treasurers believe the main development in cash management over the next 5 years is an increased trend toward outsourcing. This was the most popular response by a significant margin.

Hughes concluded: "This is quite likely a response to increased concern over risk. The events of the credit crisis have built a much more complex world for treasurers to navigate, and it seems that they foresee an increased reliance on outside assistance."

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About the Survey
Now in its tenth year, the J.P. Morgan Asset Management Global Cash Management Survey, carried out in conjunction with the ACT, continues to provide a benchmark for treasurers and other cash investors to evaluate their liquidity management processes and understand their market position in relation to their peers. In total, 314 qualifying responses were received from treasurers around the globe.

The full Survey findings are available at: www.jpmgloballiquidity.com

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For further information please contact:
Ben Larter
Media Relations EMEA
Telephone: 020-7742-2112
Email: benjamin.g.larter@jpmorgan.com

Notes to Editors

About the ACT
The Association of Corporate Treasurers (ACT) is the international body for finance professionals working in treasury, risk and corporate finance.  Through the ACT we come together as practitioners, technical experts and educators in a range of disciplines that underpin the financial security and prosperity of an organisation.

The ACT defines and promotes best practice in treasury and makes representations to government, regulators and standard setters.

We are also the world's leading examining body for treasury, providing benchmark qualifications and continuing development through training, conferences and publications - including The Treasurer magazine.

For further information visit www.treasurers.org 

About J.P. Morgan Asset Management
J.P. Morgan Asset Management is part of J.P. Morgan Chase & Co. and is a global asset management leader providing world-class investment solutions to clients. With US$1.1 trillion in assets under management (the Asset Management client funds of J.P. Morgan Chase & Co. as at December 31th 2008) and offices in 40 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.

J.P. Morgan Asset Management is a trading name of J.P. Morgan Asset Management Marketing Limited which has issued this material in the United Kingdom and which is authorised and regulated by the Financial Services Authority.  Registered in England No. 288553.  Registered office: 125 London Wall, London EC2Y 5AJ.

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