Companies in Europe are starting to cut the record amounts ofcash they accumulated since the financial crisis but they're notspending it the way central bankers hoped they would.

Corporate treasurers cracked open their war chests after cashholdings for the region's biggest companies swelled to a peak of697 billion euros ($761 billion) in June 2015, according to datacompiled by Bloomberg. But instead of spending the money to expand,companies are shifting it into short-term securities, the datashow.

Treasurers are rethinking their investment strategies after theEuropean Central Bank cut its main interest rate to negative thisyear, effectively charging lenders to park their corporate clients'money in its vaults. With bond yields pushed to record lows andeconomic turmoil damping the allure of expansion or takeover plans,companies in Europe are looking for ways to reduce the cost ofholding cash.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.