Companies Exhibiting "Growth Behavior," Reveals New AFP Survey of Corporate Financial Professionals

PROVIDENCE, R.I., June 20, 2013 /PRNewswire/ -- "Even though companies are still prioritizing safety of capital in their short-term investment decisions, more and more signs are pointing to a cautious optimism among corporate treasurers," says James Gifas, head of Treasury Solutions for RBS Citizens.

According to a new report by RBS Citizens and the Association for Financial Professionals (AFP), companies are exhibiting a greater need for liquidity in order to support corporate investment and growth. The 2013 AFP Liquidity Survey, sponsored by RBS Citizens, polled 885 corporate financial professionals across the country – a record number of respondents – about their liquidity concerns and short-term investment policies.

Key findings from the survey include:

• Demand for liquidity on the rise. When weighing the mix of investment safety, liquidity, and yield, the number of respondents rating safety as their top priority dropped to 68% in 2013, down from 77% in 2012. Liquidity as a priority, on the other hand, saw a corresponding rise to 29% in 2013, up from 21% in 2012. "This reflects at least in part a greater desire to have cash on hand," says Mr. Gifas.
• Signs of corporate "growth behavior." The 40% of companies who increased their cash balances over the last year cited a higher operating cash flow as the primary reason for this increase. For companies with reduced cash balances, the top reasons were increased capital expenditures, acquisition of a new company, or the launch of a new product. "These behaviors reflect some general movement away from the cash-hoarding we've seen in recent years," he observes.
• Greater confidence in banking partnerships. "Last year, many felt that the ending of unlimited FDIC coverage would drive down cash held in corporate bank deposits, but, in fact, this drop barely happened," says Mr. Gifas. "With widespread attention given to rigorous risk management policies banks are implementing, the presence of FDIC insurance may not hold as much weight for corporations as it did just a few years ago."
• More discipline in short-term investment policies. Companies are more restrictive in capping qualified investments than last year, with municipal securities and Eurodollar deposits being two of the vehicles with the most limits this year compared to last. "Money market funds also remain a big unknown for companies, with reform looming, and these are also more restricted this year."

"The survey shows that preservation of capital is still of utmost importance – and this is in fact what we see with our clients every day," says Mr. Gifas. "But the good news is that companies are laying the groundwork for their future with capital investments, and there is clearly some optimism in the air."

For more information or to request a copy of the AFP Liquidity Survey Report, please contact Davia Temin or Suzanne Oaks of Temin and Company at 212-588-8788 or [email protected].

About RBS Citizens Financial Group, Inc.
RBS Citizens Financial Group, Inc. is a $126 billion commercial bank holding company. It is headquartered in Providence, R.I., and through its subsidiaries has approximately 1,400 branches, approximately 3,600 ATMs and approximately 19,000 colleagues. Its two bank subsidiaries are RBS Citizens, N.A., and Citizens Bank of Pennsylvania. They operate a 12-state branch network under the Citizens Bank brand in Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont; and the Charter One brand in Illinois, Michigan and Ohio. RBSCFG has non-branch retail and commercial offices in more than 30 states. RBSCFG is owned by RBS (the Royal Bank of Scotland Group plc). RBSCFG's website is citizensbank.com.  

SOURCE RBS Citizens Financial Group, Inc.