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Crisis and liquidity management: Calyon finds solutions for clients' needs
"The financial crisis has paved the way for a return to fundamentals, in particular with respect to the gathering and distribution of liquidity. It has placed banks at the center of the economic game since alternative financing based on leverage effects has shown its limits. This rapprochement of Calyon with its clients has resulted in a record gathering of deposits from corporate clients and in a high level of activity in origination and the placing of bond issues and commercial paper. As a global player thanks to its international network and access to Central Banks and major investors, and benefiting from the creditworthiness of the Crédit Agricole Group, Calyon plays a key role in global liquidity circuits in the service of its clients," explains Michel Robert, global head of the Treasury business line.
In this special report, Calyon's professionals explain how clients' cash management needs have changed during the crisis and how Calyon is meeting these needs.
Liquidity management integrated into sales actions for corporate and institutional clients
Bruno Bourbonnaud and Pierre-José Le Prado present commercial banking actions aimed at Calyon’s clientele. They are responsible for the distribution divisions of the commercial bank respectively to institutional and corporate clients.
“The financial crisis we experienced in 2007 and 2008 effectively strengthened – at least among our large clients – reflexes aimed at optimising their liquidity management across all of their areas of influence. We have also seen a more pronounced attitude with regard to the “risk” selection of banking counterparties with which to domicile this liquidity. Under the circumstances, Crédit Agricole and Calyon have taken this change into account and have integrated it into our thinking and sales actions aimed at this clientele.
As a result, international cash management (management of payment systems and liquidity) has become a central axis of development for our commercial banking relations with this base of large clients in France and especially internationally.
With respect to a movement that we consider to be durable and probably irreversible, our approach involves:
- improving the segmentation of our client portfolio as a function of their cash management needs,
- continuing to develop a homogeneous e-banking offer across our entire network,
- helping our clients to make further use of Calyon's network, one of the densest among corporate and investment banks.”
"Corporate clients are back to focusing on performance"
Bertrand Lacasse, you are Global Corporate Sales Manager, could you please tell us what kinds of products have companies been asking for since the liquidity crisis began?
In this environment, corporate clients are looking for simple, short-term products, so that they can keep their cash readily available. The most-used products are certificates of deposit, treasury bills and Euro Medium Term Notes (EMTN). Some clients have also been buying back their own short-term debt, which they could do at bargain-basement prices in the crisis atmosphere of late December 2008. As the discounts created very high implied returns, we have seen a massive return to bond issuance. Volume is up very significantly in 2009. In the eurozone, it is running about 150% ahead of the same period in 2008.
What is new in corporates’ expectations for this market?
This year, they are back to focusing on performance, but they are still rather cautious. In fact, by emphasising safety in their investments they have been limiting their chance to improve returns. Corporates are now turning to dynamic investments such as range deposits, which provide a principal guarantee at maturity and a guaranteed minimum rate of return. We have also noticed that they are investing in slightly longer-term products, out to about two years. For example, they are selecting products that are indexed to interest rates or inflation to capture more attractive performance.
