Cash & Liquidity Management

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Greenwich Leaders: European Corporate Banking The combination of attractive rates in global bond markets and motivated lending by major banks over the past 12 months created an extremely favorable funding environment for the largest companies in Europe that has persisted into 2010. The result: Just two years ago, large European companies faced serious questions about how they would access the capital they needed to operate and grow their businesses. Today, many European corporate treasury officials face a much different question — How can I reduce the drag on ROE caused by all this cash sitting on my balance sheet?

European Corporate Banking

As Crisis Subsides, New Questions Arise

Europe’s largest companies are reporting fewer problems securing funding for their operations and increasing demand for credit to fund growth-oriented capital expenditures. These and other positive developments suggest that big European companies are at last emerging from a period of global recession and financial market duress.

However, as these companies transition from survival mode to a more ‘normal’ posture focused on growth, they should be aware that when it comes to their relationships with banks and process of financing their businesses, the new normal might be much different than the old. Changes in bank business models and strategies and the coming reform of financial regulations will have profound impacts on all the major channels used by companies to meet their funding and treasury management needs. Some of these changes could work to companies’ advantage. For example, banks’ need for stable revenue streams is sparking interest and investment in businesses such as cash management and foreign exchange. Increased competition in these areas could result in lower costs and better service quality for corporate customers.

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