SOURCE: Treasury Strategies

Treasury Strategies

June 07, 2012 14:57 ET

Corporate Cash Spikes to All-Time High, 11% of U.S. GDP

CHICAGO, IL--(Marketwire - Jun 7, 2012) - U.S. corporate cash reached new historic levels and now totals 11% of U.S. GDP. This large amount of cash is accumulating due to corporate treasurers' economic uncertainties and growing concerns over regulatory change, according to Treasury Strategies, the leading treasury and liquidity consulting firm.

The Federal Reserve reported today that corporate cash balances increased last quarter to $1.763 trillion, based on a new methodology -- a 1% increase from the previous 4Q 2011 figure.

"This growth in corporate cash can be attributed to continuing economic uncertainty, concerns about the European crisis and growing distress among corporate treasurers regarding U.S. regulatory policies," says Mike Gallanis, a Partner of Treasury Strategies.

Treasury Strategies conducts quarterly conversations with several hundred corporate treasurers. "We hear several positive signs from our clients, such as the emerging strength of capital spending and relatively strong cash flow. We are also hearing strong concerns about the impact of regulatory changes," says Gallanis.

Anthony J. Carfang, a Partner of Treasury Strategies, offers this sobering explanation, "It's becoming very clear to treasurers that the draconian regulations placed on financial institutions and markets are now flowing through those entities and landing directly on the desks of corporations."

Corporations are also asking about the stability of their financial services providers. "Will credit be there when we need it? Will our banks be able to honor their commitments? Will financial markets remain flexible to meet our requirements? These are questions that keep our clients up at night," says Cathy Gregg, a Partner of Treasury Strategies.

The combined impact of higher regulatory cost, less liquid and robust capital markets, and the ability of financial institutions to meet their funding requirements in the longer term has triggered many corporations to raise their own cash in order to "bank" themselves.

Note to Editors, Reporters: Mike Gallanis, Anthony Carfang, and Cathy Gregg are available for commentary on this matter.

About Treasury Strategies, Inc.
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. Visit TreasuryStrategies.com for more information.

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