NEW YORK Big U.S. financial companies hoarded
cash so they would not be strapped amid a credit crunch that
has lasted more than a year, according to a recent report from
Financial firms that are part of the Standard & Poor's 500
stock index .GSPF raised the cash and cash equivalent portion
of their total assets to 4.5 percent in the second quarter, up
from 3.0 percent for the same period a year earlier, the
company said in a report published last week.
"Financials are being cautious in the short term by
increasing liquidity in case they are faced with a critical
situation," Amitesh Kumar, a Thomson Reuters analyst, wrote in
S&P 500 financial companies include the biggest U.S.
commercial and investment banks such as Citigroup (C.N),
JPMorgan (JPM.N) and Goldman Sachs (GS.N).
A number of them, including mortgage finance giants Fannie
Mae FNM.N and Freddie Mac FRE.N, have written off billions
in bad mortgage-related investments stemming from the housing
In contrast to their financial counterparts, S&P 500
non-financial companies reduced the percentage of their cash
holdings during the same span, the report showed.
Non-financial companies saw the proportion of their cash
assets fall to 8.3 percent in the second quarter from 9.0
percent in the same quarter in 2007.
Overall, S&P 500 companies trimmed their short-term debt
and increased their long-term obligations over the past couple
of quarters, according to Kumar.
At the end of the second quarter, 14.4 percent of assets
were backed by short-term debt, down from 19.2 percent a year
ago. Meanwhile, the share of long-term obligations grew to 22.9
percent from 21.2 percent in the 2007 second quarter.
But the current quarter indicates a decrease in both areas,
Short-term financing has been limited, as financial
companies have been reluctant to make loans. Companies have
turned to the capital market in recent months to raise
(Reporting by Richard Leong; Editing by Leslie Adler)