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Managing cash like an institutional investor

An important lesson when banks fail.


Our institutional approach to cash management

1. What is the risk for the global banking system?

After the Silicon Valley Bank collapse and Credit Suisse takeover by UBS, the last few weeks have shown that the impact of higher interest rates, and more broadly, tighter access to liquidity and capital, will be felt across the entire industry.

Market expectations are that major institutions (ie key market players) will not be as heavily impacted:

  • Major institutions are subject to more regulatory scrutiny and partake in yearly stress test exercises conducted by central banks
  • Larger banks tend to be more structured and benefit from better risk management and controls
  • They tend to have more exposure to retail clients, whose liquidity needs are less correlated to the financial markets and whose deposits are more often insured by market authorities

Governments and market authorities have evidenced that they are monitoring the overall situation and have stepped up to minimise any spill-over effects. This effort includes the creation of specialised programmes designed to provide liquidity to institutions and lessen market turmoil. In the case of Credit Suisse, the $3.25bn takeover by UBS has been supported with additional liquidity from the Swiss National Bank and the Swiss Government.

The biggest risk to the global banking system is one of trust. The fate of SVB and Credit Suisse is largely the result of failed risk management which was amplified by the challenging rates market environment. That said, whilst the interest rate increases of the past 12 months mean the value of the certain bonds that banks may sell to meet customer demands for withdrawals has fallen quite severely, most banks are well capitalised with ample liquidity, making it very unlikely for them to rely upon the firesale of these types bonds to meet customer demands.

In fact, well managed banks are always focussed on effectively balancing the risks of their assets and liabilities. When they fail to do so, the consequences are a loss of trust in the bank leading to large withdrawals and a 'liquidity' crunch. This is what happened at Credit Suisse lately. There were large deposit outflows following the loss of confidence of some of its major institutional shareholders.

Fortunately, since the 2008 Global Financial Crisis, banking regulators have enforced strict rules that banks must comply with in order to reduce the liquidity risk.

2. Y TREE’s approach to cash management: Investing like an institutional investor

At the heart of our approach is a strong belief in the power of diversification and robust risk management, which includes counterparty risk. That is why we recommend that our clients invest their cash in Money Market Funds, like most institutional investors do, rather than holding material cash deposits with banks. A cash deposit is attached to a bank’s balance sheet.

This means, in the event of insolvency, any depositor will be in the creditor list of the bank and the likelihood of getting their money back (above the £85k that may be compensated by FSCS per eligible person, per UK-authorised bank) will depend on the outcome of the liquidation process. 

A Money Market Fund is an investment and so it is segregated from a bank’s (or custodian’s) balance sheet. The regulations in the UK and Europe require it to be identifiable and so fully recoverable in the event of an institution’s insolvency. Most Money Market Funds also invest across a large number of instruments and issuers.

For example, a Money Market Fund may be diversified in over 200 holdings across short-term loans (sometimes known as 'commercial papers'), time deposits and short-term treasuries issued by banks, corporates and government entities globally. Most managers of these funds also adhere to a strict selection criteria with regards to the issuers credit quality and solvency quality.

The information and opinions expressed herein are the view of Y TREE Limited and are based on current public information we believe to be reliable but we do not represent that they are accurate or complete and should not be relied upon as such. Any information herein is given in good faith, but is subject to change without notice. No liability is accepted whatsoever by Y TREE Limited, employees and for any direct or consequential loss arising from this document. This document is not for distribution outside the United Kingdom.

We solve 5 key personal finance problems

1It’s difficult to keep track of your finances


  • Our technology pulls together all the elements of your financial life
  • Automated data feeds with leading private banks and wealth managers
  • Instantly accessible via our intuitive App

2Reports from wealth managers are complex and difficult to compare


  • Independent assessment of risk, performance and fees
  • Understanding of key capital market drivers
  • Forensic analysis of your income, expenditure, assets and debts

3The industry focuses on investment performance not life


  • Sophisticated engine balances your money and your life
  • Constantly evolving strategy based on your aspirations
  • Flexibility to navigate changes in personal circumstances

4Financial products and acronyms are difficult to understand


  • Comprehensive advice on risk, currency, cost, liquidity and tax
  • Your dedicated team of expert advisers
  • Available 24/7 via our encrypted chat

5Wealth managers are remunerated for selling products


  • Access to processes used by the world’s most sophisticated investors
  • Multiple marginal gains compounding to significant value over time
  • Ongoing assessment to keep your life aspirations on track

The benefits of the Y TREE approach



  • An up-to-date view of your entire financial life in one place
  • Independent analysis of your investment performance, risk and all costs
  • Perspective on your currency exposure, liquidity profile and debts


  • Personal targets for your risk level, currency, cash balances and liquidity
  • Institutional processes generating multiple, incremental gains across your financial life adding up to considerable value over time
  • Our technology and approach saves you hours of time


  • Our financial life strategies mean some of our clients can afford to retire earlier without any change in lifestyle
  • Many of our clients can reduce the risk they need to take to achieve their aspirations, giving them greater security and peace of mind in turbulent markets
  • Some of our clients can fund their children’s private education, family holidays or gifting for the year through fee reduction alone

Our community

Our clients are leaders in many of the top private equity, consulting, corporate finance accounting and law firms, as well as executives in British business and tech entrepreneurs.

This is absolutely brilliant. You've captured all the issues with the a beautifully data-driven way.


I cannot begin to say how helpful this process and Y TREE have been to me. I have always dealt with the household and my partner was the financially minded one, so this process was so very helpful.


Unless I had billions of pounds, I’d never be able to replicate the quality of your team. I don’t want a family office - this is what I need.


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The value of investments as well as the income derived from them can go down as well as up and investors may get back less than the original amount invested.