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Tuesday, December 11, 2012

Survey: Businesses to Cut Bank Balances if TAG Expires

A survey released yesterday found that if the TAG program expires, 51% of organizations expect to move at least some of their cash and short-term investment portfolios away from noninterest bearing bank accounts into other investment vehicles.

“Organizations that plan to reduce the amount of their short-term investments currently held in bank accounts if [the TAG program] expires … plan to reduce such holdings by a median of 20 percent,” according to the Bethesda, Md.-based Association for Financial Professionals’ 2013 Business Outlook Survey.
Twenty-eight percent of organizations that will reduce bank deposits will do so by between 10 and 24 percent, while 21 percent … will reduce these holdings by between 25 and 49 percent. Some organizations will make an even more dramatic shift: 20 percent … will reduce the size of their current bank deposits by at least half.
It added that the most likely destinations for cash and short-term investments removed from bank accounts would be money market funds and Treasury securities/agency bonds.

Read the survey (page 11).

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