American money manager Payden & Rygel has set up an office in the UK to develop its European strategy. Robin Creswell, managing director at Payden & Rygel in London says: “One of the reasons why we are focusing on cash management in Europe is because European institutions are becoming much more aware of the need to improve the returns they obtain on cash.”
“Until recently the UK was a very high interest rate environment, so improving the return on cash was not really a priority,” he says and adds: “But now that the interest rate is so low, it is possible to pick up 50 or 60 basis points.”
With about 260 institutional clients in the US, some of them with subsidiaries in Europe, and a number of European clients already, the company has several target markets. “In terms of cash management, we are particularly interested in the treasury department of corporations, local authorities and other institutions and insurance companies which have short-term assets, that sometimes they held in cash for liquidity reasons,” Creswell says.
He believes cash management in Europe is still underdeveloped. “The amount of money in cash management in Europe is probably less than 5% of what is under management in the US,” he comments.
“In the next few months we will see an increase in awareness for the need to run cash more efficiently. People are preoccupied with improving the return they receive on cash,” says Creswell.
Payden & Rygel has approximately US$7bn (e6.6bn) in cash or short-term fixed income strategies. With its headquarters in Los Angeles, the London shop is its first overseas office and will work in co-operation with the joint venture established last year with Metzler Bank in Frankfurt. Paula Garrido