J.P. Morgan Asset Management Annual Global Cash Management Survey

Jan 21, 2010

  • Tighter credit conditions and economic downturn has resulted in severe liquidity constraints
  • Treasurers placing unprecedented scrutiny on financial strength
  • Flight to quality at expense of yield

London, 21 January 2010: J.P. Morgan Asset Management has revealed the emerging trends from its eleventh 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.

This year’s survey has revealed that there has been a clear attempt by treasurers to manage cash more skillfully and more efficiently in order to avoid potential cash flow difficulties. Counterparty risks have been reduced, the number of banking relationships and the nature of the services used have changed (either by choice or forced by the withdrawal of lenders from local markets), while treasurers with surplus cash to invest have been tightening policy guidelines and seeking out only the highest quality products, even at the expense of yield. Whilst the full report can be viewed at www.jpmgloballiquidity.com, the key findings are as follows:

Banking relationships are increasing – those surveyed revealed another increase in the number of banking relationships on last year (particularly in Asia with 50% reporting a rise) suggesting that some treasurers have diversified counterparty risk, while others may have been forced to use more banks for the services they require in the wake of the global financial crisis.

Treasurers are taking a more strategic role – difficult trading conditions, the weak economic backdrop and potential reduction in traditional funding sources are creating a greater focus on cash flow forecasting and liquidity.

– Bank deposits are still favoured by EMEA and Asian treasurers – Most surplus cash is allocated to bank deposits across EMEA and Asia despite several recent high profile banking failures and a drop in banking credit ratings. Meanwhile, the percentage of treasurers permitted by their guidelines to invest in pooled funds has dropped. This is surprising as demand for triple-A rated money market funds has been strong through the financial crisis. More than half of respondents who use pooled funds are now demanding a minimum triple-A rating – this is up slightly from just under 50% last year, but is considerably higher than the 35% who demanded the highest rating in 2007.

Kathleen Hughes, Head of Global Liquidity EMEA at J.P. Morgan Asset Management commented: “This does, perhaps, reflect the concerns of continental European treasurers about the quality of riskier European cash funds that do not maintain a stable NAV.”

– US treasurers favour money market funds – US respondents continue to make much higher allocations to money market funds and lower allocations to bank deposits than in Europe and Asia.

Treasurers are sacrificing yield for higher credit ratings – the survey suggests treasurers are seeking higher minimum credit ratings when investing in pooled funds, direct investments and even bank deposits. In return for this reduction in risk, treasurers have generally reduced their return expectations over the last year.

De-risking theme set to continue – the biggest future concern for treasurers was, unsurprisingly, liquidity which took 71% of the votes, reflecting the severe dislocation of credit markets, corporate cash flow constraints and the high profile banking failures that have been experienced since the previous survey was compiled. The previous survey saw foreign exchange risk named as the key concern for treasurers. Counterparty risk (68%) and cash flow forecasting (60%) were also amongst their main concerns.

Commenting on the findings of the survey, Hughes said: “What is clear from this year’s results is that risk aversion is continuing to stalk financial markets. Counterparty risk is being reduced, wherever possible, and treasurers are maintaining higher levels of liquidity with a bias towards quality in the pooled funds space. It seems that treasurers are focusing more than ever on credit quality. The financial crisis has accentuated the need to keep a tight control on costs and reduce the need for reliance on external sources of finance, which is why we’ve seen treasurers take on an increasingly strategic role and utilise a full range of tools to help them manage their cash more effectively.  One area that the survey highlights is the critical importance of cash flow forecasting, especially in this low rate environment. Treasurers that are able to accurately forecast their flows may be able to take advantage of investment strategies to target higher returns without sacrificing credit quality. This is something that we are talking to treasurers about much more frequently. ”


About the Survey
Now in its eleventh 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, a record 334 qualifying responses were received from treasurers around the globe.

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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 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$1.2 trillion in assets under management (the Asset Management client funds of J.P. Morgan Chase & Co. as at December 31st 2009) 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.

Any past performance referred to in this material is not a guide to future performance and the value of investments, and any income from them, can fall as well as rise.  Any tax concessions referred to are not guaranteed and their value will depend on the individual circumstances of investors.  Stock market linked investments carry a number of inherent risks.  These risks will increase where fluctuations in exchange rates impact on the value of any underlying investments or where the investment is exposed to smaller companies or emerging markets.  Investments in fixed income securities that are not rated as investment grade represent a greater risk to an investor’s capital.

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

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