The scars of 2008 are still fresh for company treasurers and investment officers as they keep half of their firms' cash in bank deposits, according to a global survey by JPMorgan Chase & Co.
The 300 cash managers surveyed are favoring liquidity over yield even as half of them face declining earned interest. They're putting just a quarter of their assets in money-market funds that face tougher rules from U.S. regulators, the survey shows.
"They have gotten into the mindset that they want to have that rainy day fund," John Donohue, chief investment officer for JPMorgan's global liquidity business, said in a telephone interview. "A lot of corporations want to hold higher liquidity than in the past. In 2008, they saw a lot of liquidity dry quickly."
Recommended For You
Respondents in Asia were sitting on the highest percentage of cash in bank deposits, at 68 percent, according to JPMorgan. In the Americas, they're allocating an average 38 percent, with 34 percent held in money funds.
The majority of cash managers planned to maintain their allocations into next year, when economists expect central banks in the U.S. and U.K. to increase their interest-rate benchmarks. They'll also largely maintain or decrease allocations to money funds after the U.S. Securities and Exchange Commission this year set rules requiring the funds to show share-price variations.
The conservative approach propelled cash holdings by U.S. non-financial companies to a record $1.65 trillion through the first half of this year, according to an Oct. 20 report by Moody's Investors Service.
Some treasurers are starting to get comfortable moving cash out of money-market funds and bank deposits and into short-term bonds funds, Donohue said.
Signs are emerging that they may be willing to take a "little more risk with their cash as they get more comfortable with the credit backdrop," he said. "The main focus is still on figuring out what options are available to them with the regulatory changes under way and changes in the interest-rate environment."
Bloomberg
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
