Bond markets have repriced money, Banks are not keeping up
Rising bond yields are changing the economics of cash, debt and liquidity.
But there is a problem for Corporate Treasurers.
Many Companies are trying to navigate today’s markets with banking arrangements negotiated for yesterday’s conditions.
Legacy bank account configurations, static pricing agreements, fragmented banking relationships and outdated liquidity structures can prevent companies from capitalising when market conditions change.
As a result, bank margin leakage widens, directly impacting the bottom line:
Funding costs reprice quickly. Corporate cash often doesn’t.
And our recent research suggests many Treasury teams may not have the visibility needed to identify that gap.
73% said they had only partial or no visibility into the total value their banks earn from the relationship.
93% were not fully confident they could validate bank pricing against agreed terms and market benchmarks.
And just 27% had independently benchmarked their principal banking arrangements within the previous 12 months.
This really matters when markets are moving.
A banking arrangement that was competitive two or three years ago may no longer be competitive today.
And the numbers add up quickly.
A 50bp widening of interest margins on net cash positions increases banking costs by $50k for per each $10m of net cash
This isn’t about changing banks or squeezing every last basis point from banking partners.
It’s about understanding the economics of the relationship and ensuring that corporate banking arrangements evolve as market conditions evolve.
Interestingly, our survey found that Corporate Treasurers already see the opportunity:
48% identified renegotiating banking relationships as an opportunity to improve value, while 45% identified improving liquidity.
Markets have repriced the value of money. Are your banks keeping pace?
