TSI Corp Cash January 2014

Treasury Strategies Quarterly
Corporate Cash Briefing™ for 4Q 2013
Presented by:
Monie Lindsey, Managing Director
Tony Carfang, Partner
9 January 2014
© 2014 Treasury Strategies, Inc. All rights reserved.
Agenda
Corporate Cash Levels
Basel III Preparations
Game Changers
Roundtable:
-  Association of Corporate Treasurers (ACT)
-  Federated Investors
-  Fitch Ratings
2!
Corporate Cash Levels
Corporate Cash Levels
UK corporate cash as of Sept 30, 2013
US corporate cash as of Sept 30, 2013
Total US Corporate Cash ($T)
Total UK Corporate Cash (£T)
1.95
0.65
$1.93T
1.85
1.75
£0.52T
0.55
1.65
1.55
0.45
1.45
1.35
0.35
1.25
1.15
0.25
1.05
0.95
0.85
Sep-00
Sep-01
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
0.15
Sep-00
Sep-13
Source: Federal Reserve, Treasury Strategies
Sep-01
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Source: Office of National Statistics, Treasury Strategies
Eurozone corporate cash as of June 30, 2013
Japanese corporate cash as of September 30, 2013
Total Eurozone Corporate Cash (€T)
Total Japan Corporate Cash (¥T)
2.00
€1.95T
1.90
2.45
¥234T
1.80
2.35
1.70
2.25
1.60
1.50
2.15
1.40
1.30
2.05
1.20
1.95
1.10
1.00
1.85
0.90
0.80
Jun-00
Jun-01
Jun-02
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Source: European Central Bank, Treasury Strategies
Jun-12
Jun-13
1.75
Sep-00
Sep-01
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Source: Bank of Japan, Treasury Strategies
4!
Corporate Cash Index
Total Corporate Cash Index
300
£0.52T
€1.95T
$1.93T
200
¥234T
100
0
Sep-00
Sep-01
Sep-02
Sep-03
US Index, base 2000
Sep-04
Sep-05
Sep-06
EU Index, base 2000
Sep-07
Sep-08
Sep-09
UK Index, base 2000
Sep-10
Sep-11
Sep-12
Sep-13
Japan Index, base 2000
Sources: Treasury Strategies, Inc., Federal Reserve, ECB, ONS
Note: 1Q 2000 = 100
5!
Corporate Cash as % GDP by Region
Country/Region
September 2000
September 2013
9%
11%
Eurozone
14%
20%
United Kingdom
25%
32%
Japan
36%
49%
United States
Source: Treasury Strategies’ estimate
6!
Reserve Balances
Bank Reserve Balances at the BoE
September 2006 - September 2013
Bank Balances at the US Federal Reserve
September 2006 - September 2013
250
Bank Balances at the BoE
2,000
1,500
1,000
-
Sep-06
200
150
100
50
500
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
0
Sep-06
Sep-13
Source: Federal Reserve H3 Report, Treasury Strategies
1000
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Source: Bank of England, Treasury Strategies
Bank Reserve Balances at the ECB
September 2006 - September 2013
900
Bank Balances at the ECB
Bank Balances at the Fed
2,500
800
700
600
500
400
300
200
100
0
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Source: European Central Bank, Treasury Strategies
7!
Reserve Balances
Swiss National Bank Reserves:
September 2006 - September 2013
Bank of Japan Reserves:
September 2006 - September 2013
600
90
Bank Balances at the SNB (CHF B)
Bank Balances at the BOJ (JPY T)
100
80
70
60
50
40
30
20
10
0
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Source: Bank of Japan, Treasury Strategies
Sep-12
Sep-13
500
400
300
200
100
0
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Source: Swiss National Bank, Treasury Strategies
8!
Basel III Preparations
Basel III Stakeholders
Who is taking the lead in Basel III preparedness?
40%
35%
30%
34%
29%
23%
25%
20%
14%
15%
10%
5%
0%
Treasury / ALCO
Finance
*Other includes: Risk / Compliance,
Operations, and Cross-functional teams
Business Units
Other
Who is involved in your Basel III preparations?
80%
70%
73%
71%
63%
60%
50%
49%
50%
40%
32%
30%
20%
6%
10%
0%
Treasury / Finance
ALCO
Business
Units
Risk
IT
Outside
Consultant
Other
Source: Treasury Strategies 2014 Basel III Survey of Financial Institutions
10!
Deposit Economics
Which elements of Basel III represent the greatest
challenges to your deposit economics?
60%
56%
52%
50%
40%
30%
31%
29%
20%
13%
10%
0%
Capital
Leverage Ratio
Requirements
Liquidity
Coverage
Ratio
Net Stable
Funding Ratio
Don't Know
Source: Treasury Strategies 2014 Basel III Survey of Financial Institutions
11!
Product Strategy
Do you have a strategy to introduce new products in response to Basel III?
Deposit
Products
Credit Products
Transaction
Banking
Products
Yes
65%
62%
58%
No
21%
22%
27%
Unsure / Don’t Know
15%
16%
15%
Source: Treasury Strategies 2014 Basel III Survey of Financial Institutions
12!
Game Changers
Potential Game Changers
Monetary Policy of
Central Banks
“Tapering”
Implementation of
Basel III
Money Market Fund
Regulation
Volker Rule
Significant Divergence in
Corporate Cash Levels
14!
Speakers
Tony Carfang
Partner
312.628.6921
[email protected]
Monie Lindsey
Managing Director
+44 (0) 207 872 5551
[email protected]
Martin O’Donovan
Deputy Policy & Technical Director
+44 (0) 207 847 2577
[email protected]
Deborah Cunningham
Chief Investment Officer
412.288.8481
[email protected]
Please feel free to join our Treasury Management
Group on LinkedIn http://www.linkedin.com/e/vgh/
50323
Please feel free to join our Financial Services
Regulation Group on LinkedIn http://
www.linkedin.com/e/vgh/1799642
Roger Merritt
Managing Director
212.908.0636
[email protected]
15!
About Treasury Strategies, Inc.
Who We Are
Treasury Strategies, Inc. is the leading treasury consulting firm working with corporations and
financial services providers. Our experience and thought leadership in treasury management,
working capital management, liquidity and payments, combined with our comprehensive view of
the market, rewards you with a unique perspective, unparalleled insights and actionable solutions.
What We Do
Corporations
We help you maximize worldwide treasury performance and
navigate regulatory and payment system changes through a
focus on best practices, technology, liquidity and controls.
Treasury Technology
We provide guidance through every step of the technology
process. Our expert approach will uncover opportunities to
optimize the value of your treasury through fully integrated
technology solutions.
Financial Services
Our experience, analytic approach and benchmarks provide
unique consulting solutions to help you strengthen and grow
your business.
Locations
Chicago • London • New York
Accreditations
Connect with Us
www.TreasuryStrategies.com/
content/networking-communities
@TreasuryStrat
16!
About the ACT
Who we are
The Association of Corporate Treasurers (ACT) sets the benchmark for international treasury
excellence. As the Chartered body for treasury, we lead the profession through our internationally
recognised suite of treasury qualifications, define standards and support continuing professional
development. We are the voice of corporate treasury representing the interests of our members.
What we do
ACT support s the growth and professional development of
treasurers and finance professionals We are an active global
network of treasury, risk and finance professionals with members
and students in 98 countries.
- We promote treasury as a discipline, as a profession and as a
career
- We provide informed and unbiased technical advice
- We teach, examine and qualify treasury professionals and offer
ongoing CPD
- We stimulate debate and facilitate the exchange of ideas and
information through our events, conferences, webinars and forums
- We represent the real economy and influence relevant regulation
and market practice.
www.treasurers.org
www.treasurers.org/linkedin
twitter.com/actupdate
facebook.com/actupdate
youtube.com/treasurersorg
17!
About Federated Investors, Inc.
FIRM PROFILE
History of Quality and Innovation
•  Founded and headquartered in Pittsburgh PA, 1955
•  Offices in New York, Rochester, Boston, Dublin,
Frankfurt, London and Melbourne
•  1,400+ employees worldwide including 223 investment
professionals and 84 Chartered Financial Analysts
•  Pioneer of money market and fixed income funds
Publicly Traded
•  NYSE listed: FII
•  Employees share in approximately 20% of firm’s
ownership
Investment Management Singular Focus
•  Committed to delivering long-term outperformance
•  Strategies utilize risk-management process and
maintain
style consistency
$379.8 BILLION IN AUM
Firm-Wide
15.8%*
9.2%
75.0%
Liquidity Management
Equity
Fixed Income
*Liquidation portfolios comprise of 12.2% of firm-wide fixed income total.
4Q Revenue by Source
22.7%
Well-Resourced Investment Teams
•  Experienced specialized teams committed to delivering
long-term outperformance
•  Deep historical commitment to proprietary research
•  Majority of investment professionals’ compensation
directly
tied to performance
46.9%
30.4%
Liquidity Management
Equity
Fixed Income
Asset breakdown as of 12/31/12
18!
About Fitch Ratings
Fitch Ratings is a leading provider of credit ratings, commentary, and research. Dedicated to
providing value beyond the rating through independent and prospective credit opinions, Fitch
Ratings offers global perspectives shaped by the strong local market experience and credit market
expertise. The additional context, perspective and insights we provide help investors to make
important credit judgments with confidence.
Fitch Group is a global leader in financial information services with operations in more than 30
countries. In addition to Fitch Ratings, the group includes Fitch Solutions, an industry-leading
provider of credit risk products and services, and Fitch Learning, a preeminent training and
professional development firm. Fitch Group is jointly owned by Paris-based Fimalac, S.A. and New
York-based Hearst Corporation.
For additional information, please visit www.fitchratings.com
.
19!