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Corporates plan to switch a quarter of cash reserves

by LLB Finance Reporter
6th Jan 22 10:26 am

New Investec research shows corporates and large SMEs plan to switch a quarter (26%) of their cash reserves on average over the next six months in search of higher rates.

However, its study among 100 senior executives at corporates with total cash deposits of more than £6.17 billion and average reserves of around £62.3 million found just over a third (35%) expect the rates they earn on reserves to increase over the next six months compared with 41% who expect them to drop.

The research for Investec, which provides bespoke deposit accounts for corporates with between £5 million and £150 million on deposit, underlines that rates are not the only consideration for corporates managing cash reserves.

More than a quarter (27%) rate the service they receive from providers as average or poor and competitiveness of rates was not ranked as the most important factor when choosing a treasury reserve services provider.

Around 87% of corporates said an approved treasury mandate was the most important factor when choosing a provider as the table below shows.

Factors to consider when reviewing cash deposit/treasury reserve service providers Percentage of corporates and large SMEs who consider this as important
Approved treasury mandate 87%
Access to relationship manager for advice 77%
Competitiveness of interest rate 73%
Provider’s credit rating 72%
Flexibility of terms and conditions 68%
Ability to manage cash online 66%

FJ Eigelaar, Head of Client Group Funding at Investec, said, “Corporates are looking to move cash over the next six months with around a quarter of reserves on average being switched with 27% planning to move 30% or more of their reserves.

“It is arguably more significant that so many companies believe the service they receive from providers is average or poor which is worrying when cash management is very important for businesses.

“Interest rates are clearly important, but providers need to offer more than just competitive rates in order to win business and attract new customers.”

Investec’s study found 23% of companies rate the service they receive from providers as excellent while 48% regard the service including the rate as good.

Investec offers a wide range of bespoke deposit accounts for corporates and large SMEs for minimum deposit sizes of £5 million. Products include notice accounts, instant access accounts and its Access 50 account offering higher rates than notice accounts and also the flexibility of fee-free instant access up to 50% of the deposited amount.

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