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Corporate liquidity increased to US$3.5 trillion in 2023 - Industry roundup: 3 May

Corporate liquidity increased to US$3.5 trillion in 2023

Corporate liquidity health increased to nearly US$3.5 trillion by the end of 2023, which represents a year-over-year increase of US$180bn compared to 2022, according to Kyriba’s Corporate Liquidity Performance Report. The report also shows that the total liquidity of public US companies with revenue over US$1.0bn has trended higher over the past four quarters, which is evidence of the continued economic uncertainty and ongoing market volatility.

To better understand the drivers of a healthy financial performance and corporates’ access to short-term liquidity, which is liquidity that can be rapidly deployed, Kyriba calculated these findings by sourcing cash equivalents, short-term investments and available credit, while deducting the current portion of long-term debt and net interest expense. The report analysed quarterly data from over 1,000 US corporations with annual revenues exceeding US$1bn in 2023, excluding banking institutions, to develop its report.

According to the report’s findings, corporate Liquidity for US companies was US$3.46 trillion at the end of 2023, an annual increase of US$180bn. The top three industries with the greatest access to liquidity in 2023 were non-bank financials, information technology and real estate services.

The Kyriba Short-Term Liquidity (STL) Index, a measure of variability normalised by revenue size, increased 5.0% quarter-over-quarter and 5.6% year-over-year. Large corporations (over US$50bn revenue) exhibit lower and more stable STL Index ratios, while smaller (US$1-5bn revenue) firms were more responsive to changes in market conditions.

Kyriba also assessed its customers within the study to evaluate access to liquidity against their peers. The report found that companies using Kyriba exceed the STL Index by an average of 6%, or US$12m per US$1bn in annual revenue. Kyriba customers further outperformed in sectors including non-bank financials (US$79m higher per US$1bn revenue), information technology (US$131m higher per US$1bn revenue), industrials (US$83m higher), and communications (US$60m higher per US$1bn revenue).

“CFOs need to demonstrate resilience and agility to changing market conditions,” said Melissa Di Donato, Chair & CEO of Kyriba. “Yet finance teams are stuck in ‘liquidity gridlock’ – antiquated spreadsheets, fragmented data, and disconnected systems. This report highlights the significance of dependable, timely liquidity insights and demonstrates how our liquidity performance platform plays a pivotal role in improving our customers’ access to liquidity.”


EBA paper explores identification of Politically Exposed Persons (PEPs)

The Euro Banking Association (EBA) has published recommendations aimed at improving Know Your Customer (KYC) practices in the corporate-to-bank domain across Europe with regard to the identification and handling of Politically Exposed Persons (PEPs), their family members and close associates.

The publication by the EBA Expert Group on KYC-related Topics (KYCEG) titled “EBA CBCS – Identification of Politically Exposed Persons (PEPs) in the corporate-to-bank KYC process” is part of the Common Baseline Classification Standard recommendations series and available for download on the EBA website.

The paper examines current procedures and due diligence processes related to PEPs and their associates, including the evaluation of Functional PEP Lists and the status of senior managers in State-Owned Enterprises (SOEs). It provides recommendations to support the implementation of automated KYC processes and enhance the ability to consistently monitor corporate customer data across Europe.

The publication focuses on several key areas, including:

  • Reviewing current methods and standards for identifying PEPs, their family members and close associates.
  • Assessing the identification of senior managers in State-Owned Enterprises.
  • Exploring the use of Functional PEP Lists and their potential benefits and challenges.
  • Providing recommendations to support the implementation of automated KYC processes.

“The current regulatory landscape related to PEPs in Europe is fragmented and inconsistent, posing significant challenges for financial institutions operating across borders,” says Thomas Egner, Secretary General, EBA. “With our work, we do not propose changes to existing regulations, but rather seek to address these challenges by examining existing practices and recommending practical solutions to enhance KYC processes while promoting harmonisation.”


UK businesses demonstrate optimistic outlook

Lloyds Bank’s latest Business Barometer has found that overall business confidence remained unchanged in April - staying at 42%. This means the overall confidence figure remains elevated compared to the Barometer’s long-term average (28%), with only January 2024 seeing businesses report higher levels of confidence (44%) in the last 12 months. 

Although April is now the third month in a row where business confidence has not changed, firms did show more positivity than previous months in relation to the wider economy. In this respect, businesses reported the highest level of confidence in the economy since February 2022. Almost two-thirds (57%) of firms expressed greater optimism about their economic prospects, while 18% were less optimistic (down from 21% in March), meaning the net balance increased by 4 points to 39%.

Official monthly GDP data appears to corroborate these findings, as the data for January and February suggests the economy began to grow again early this year.

When asked about their own trading prospects, businesses continue to be positive, although slightly less than in previous months. Over half (55%) of the companies surveyed said they expected a stronger output over the next 12 months, while an unchanged 10% anticipated weaker activity. As a result, the net balance for trading prospects fell 4 points to 45%.

Concerns about supply chain disruption have reduced, compared to previous months. It is no longer the factor most concerning businesses, with interest rates, inflation, and energy prices the most prominent issues. Tellingly, even concern about these issues has continued to trend downward, coinciding with increased confidence reported by businesses. 


New partnership to support real-time treasury management with premium APIs

Automation Boutique and Necto have partnered to deliver premium API solutions to corporate treasury. This will enable corporates to connect with dozens of banks and exchange data in real-time – including bank balances & transaction history – and initiate payments.

Necto provides a secure API aggregator that enables companies to link with their banks in real-time. Automation Boutique offers the implementation of Necto's premium API, allowing companies to move to real-time treasury management and directly synchronise with their systems of choice, whether it be PowerBI, Excel, Tableau, TMS, or ERP.

Leveraging premium APIs for bank interactions can improve corporate treasury operations, offering benefits such as intraday liquidity management, improved cash forecasting, continuous payment rails, seamless data integration, immediate payment execution, advanced liquidity insights, and up-to-the-minute payment statuses.


Federation of Small Businesses strikes payments partnership with NatWest Group

NatWest Group has announced a new partnership with the Federation of Small Businesses (FSB). This official payments partnership builds on the support the NatWest Group has given to FSB over the years as the UK’s biggest bank for businesses. As a result of the partnership, FSB members will have access to a range of payment solutions from Tyl by NatWest.

A statement from the bank says that FSB members will see cost savings and other benefits by signing up with Tyl, subject to eligibility criteria as part of the partnership. Insight from Tyl by NatWest found that 8 out of 10 businesses could save on fees when switching from an existing card payment provider to Tyl by NatWest.

For the smallest businesses, Tyl offers a simple fee structure based on one low rate for personal card transactions (where the card is issued in the UK or Europe) and one for all other transactions. For bigger businesses, Tyl has a range of different fees to fit the needs of the business.

“As many of our members, and the wider UK small business community, continue to navigate the increasing cost of trading, an opportunity to make savings on payments, which is core to every business, will be well-received,” commented Caroline Lavelle, Chief Commercial Officer, FSB.


Tide set to launch business accounts in Germany with Adyen

Adyen has partnered with UK-based business financial platform Tide, to offer small and medium-sized businesses (SMEs) Tide business accounts, first in Germany before potentially expanding further into Europe.

Tide will soon offer business accounts to small businesses in Germany lacking a finance function. Highly connected finance and admin solutions such as invoicing and accounting are to follow later in 2024. For Adyen, this is the first launch of its banking-as-a-service solution in Germany.

Through the partnership, Tide says it is able to fortify its customer-centric approach and leverage Adyen’s full-stack banking-as-a-service offering, which includes inbound and outbound payments via the SEPA payments system. Tide members in Germany will receive a German IBAN number when they open a business account from launch. This allows them to receive and spend money with a local account reference. 


Pleo secures €40m debt financing from HSBC Innovation Banking

Spend management platform Pleo has secured a €40m debt financing facility from HSBC Innovation Banking UK. The deal enables Pleo to offer higher credit limits to more customers, providing flexibility in the financial options available to them. This, in turn, should help the firm to unlock new customers in new markets and currencies.

With Pleo’s overdraft facilities already in use across Sweden, Germany, the UK and a recent launch in Denmark, the fintech will use the debt financing facility to drive further growth across Europe - starting with overdraft facilities being rolled out to the Netherlands over the coming weeks.

Over the last six months, the average company has seen 6% of their total transactions fail due to insufficient funds. Pleo’s partnership with HSBC Innovation Banking is designed to alleviate such pain points and boost its credibility in the market.

“Starting at €40 million, the debt financing available to us can extend based on future requirements - which will expand our existing reach even further into more countries, enable us to increase limits and offer more currencies,” said Amit Kahana, VP of Credit and Treasury at Pleo. “Beyond this milestone partnership and imminent launch in the Netherlands, we are expecting to see exciting developments over the coming 12 months as we prepare to launch in even more markets.”


Finastra selects OpenFin to unlock productivity for bank TMS customers

Finastra and OpenFin have announced a partnership that aims to redefine the user experience of Finastra Kondor, a bank treasury management system. With OpenFin’s technology, Finastra hopes to drive greater efficiencies and streamline banks' decision-making processes. The partnership is part of a wider Kondor evolution, which includes leveraging microservices, embedded AI, and partner ecosystems to deliver intuitive and persona-based experiences available via Treasury as a Service (TaaS) and cloud capabilities.

OpenFin’s Workspace “Anywhere” technology should enable Kondor users to have easy access to the solution either in web browsers such as Google Chrome and Microsoft Edge or as a lightweight desktop app. Whether curating personalised experiences via the micro-UI workspace, or consuming partner applications via unified dashboards, the goal is that banks benefit from a more seamless, intuitive and value-added treasury management experience wherever they are working.

“Through robust technology and TaaS, we’re giving banks the tools to fast-track their transformation, future-proof their business to evolve with new demands and optimise their entire treasury operations – from full back-office processing through to real-time coverage of credit, market and liquidity risk in the front office,” said Herve Carrere, Chief Product & Technology Officer, Treasury & Capital Markets at Finastra. “The seamless workspace experience also ensures that users can easily access these tools in the way that works best for them.”

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