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Survey: Companies Turn to Bank Deposits as COVID-19 Crisis Continues

The 2020 Association for Financial Professionals (AFP) Liquidity Survey finds financial professionals prioritizing safety as they brace for uncertain times ahead.

June 23, 2020 –Bethesda, Md.-- Companies are holding their short-term investments in banks due to concerns over the economy, according to the 2020 AFP Liquidity Survey, underwritten by Invesco.

In a survey of nearly 375 corporate treasury and finance professionals in early March, 51% of respondents revealed that they increased their short-term investments in banks. This is the highest percentage in three years and a reversal of a downward trend that began in 2015. Although the survey was taken before the full effect of liquidity preservation efforts had set in due to the COVID-19 outbreak, this flight to caution likely reflects concerns that the pandemic poses a critical threat to the global economy.

Safety continues to be the most-valued short-term investment objective for 62% of organizations, followed by liquidity at 34% and yield at a distant third with 4%. Given the current recession, we should probably expect larger shares of companies opting for safety in the future.

As the crisis surrounding the pandemic unfolds, trust in banking partners will be paramount as the survey reflects.

  • Ninety-three percent of respondents consider the overall relationship with their banks to be the primary driver in bank deposit selection.
  • Seventy-three percent indicated that the credit quality of a bank is a deciding factor in determining where to maintain balances.

“Bank deposits saw an increase for the first time in five years, and that’s not a coincidence,” said AFP president and chief executive officer, Jim Kaitz. “Although we performed this survey in the early days of the pandemic, financial professionals could see the gathering storm. With companies needing more access to liquidity and drawing down on credit facilities, their relationships with their banks will become more important than ever. 

Additional findings:

  • The percentage of companies with written investment policies declined by nine points to 71%. However, this area will likely be prioritized amid the current recession.
  • The majority of cash and short-term investments held outside the U.S. is in U.S. dollars (52%) and bank products, mirroring a domestic approach to investing.

“As a global provider of cash solutions, we have successfully navigated the recent environment through our longstanding strategy that considers safety and liquidity in tandem with (or alongside) yield,” said Laurie Brignac, CIO and Head of Global Liquidity, Invesco.

“The heightened importance of reliable practices and planning in uncertain environments is consistent with the findings in this annual survey, and we see that borne out with the consideration of cash segmentation strategies with many of our global clients both in the U.S. and abroad.”

For more information about the survey, please visit www.afponline.org/liquidity. For press queries, please contact Melissa Rawak at mrawak@afponline.org.

About AFP®
Headquartered outside of Washington, D.C. and located regionally in Singapore, the Association for Financial Professionals (AFP) is the professional society committed to advancing the success of treasury and finance members and their organizations. AFP established and administers the Certified Treasury Professional and Certified Corporate FP&A Professional credentials, which set standards of excellence in treasury and finance. Each year, AFP hosts the largest networking conference worldwide for more than 7,000 corporate financial professionals.


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