The year-end dance

As the year draws to a close and most people start dreaming of a well-earned break, the banking sector often moves in the opposite direction. Instead of winding down, it can descend into a flurry of activity as assets and liabilities scramble for a home as banks flex their financial resource muscles.

The need to remain within regulatory buffers can lead banks to shrink balance sheets, which in turn means lower deposit or funding bases. This isn’t uniform across the market, but it does mean the number of bidders for cash can fall, and some may stop taking it altogether. This annual ritual, often termed ‘window dressing’, is a familiar dance for all of us… with a touch of liar’s poker thrown in, just in case you’ve read the room wrong.

It's not easy to predict who needs what, but one lesson is consistent: avoid being overly correlated to those who might abruptly turn funds away at year-end.

At TreasurySpring, our job is to provide liquidity options that work for both clients and banking partners. We have positioned our products such that concentration risks or correlation to such squeezes are reduced through diversification. Our broad market access means that when one sector says “it’s outbound only”, we have connections to others who are more than happy to absorb this capacity. Our Fixed-Term Funds (FTFs) span global banks (with different year-ends), governments and SSAs with no balance sheet constraints, and corporates. We also have deep expertise in placing structured or large sums efficiently across a wide range of instruments – all while targeting the best risk-adjusted returns.

Building this access is why we exist. We have grey hair, so you don't have to (well, some of us). If you need support navigating this period, we’re here to help.

TreasurySpring’s blogs and commentaries are provided for general information purposes only, and do not constitute legal, investment or other advice.