Promontory Announces Development of ICS
Insured Cash Sweep (or ICS), is a new, low-cost, dollar-for-dollar reciprocal deposit sweep service currently in pilot testing. ICS will allow financial institutions to:
- Offer customers a business savings product with access to multi-million-dollar FDIC insurance on savings deposits.
- Set the interest rates they offer to customers for funds placed through ICS.
- Receive reciprocal deposits from other banks so that the full amount of their customer’s savings deposits remains on balance sheet.
If you’re interested in participating in our pilot or would like more information, contact us at 866-776-6426 (and select option 4) or contactus@promnetwork.com.
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Standard & Poor’s Reviews CDARS
CDARS received very positive reviews in a March 8 Standard and Poor’s Credit FAQ piece entitled, "What Effect Will The Certificate Of Deposit Accounts Registry Service Program Have On Fund Ratings?” In the report, Standard and Poor’s stated that from a credit perspective, it deems CDs issued through CDARS to be “AAA/A-1+” equivalent. Excerpts from the report are available at Crane Data.
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ABA, Promontory to Unveil Market for FDIC Credits
"WASHINGTON — The American Bankers Association
and Promontory Interfinancial Network
are set to announce a new program today that lets banks buy and sell their prepaid assessment credits from the
Federal Deposit Insurance Corp."
To read more click here.
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CDARS® Floating-Rate FundingSM
What are CDARS Floating-Rate Funding Transactions?
CDARS Floating-Rate Funding transactions are a great way to obtain floating-rate funding over long terms at short-term rates. There are numerous reasons why financial institutions will want to take advantage of Floating-Rate Funding transactions:
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Diversity. Floating-Rate Funding transactions can help financial institutions to obtain large blocks of funding and diversify their wholesale funding options.
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Flexibility. Terms can range from 1 to 7 years. Some Promontory Network members choose to swap their floating-rate funding for long-term, fixed-rate funding via a third party when the market environment is favorable.
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No collateral required. This type of funding is very similar to other wholesale funding options, but without collateral or stock purchase requirements.
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No hidden fees. Pricing is tied to either the 1-month LIBOR or the Fed Funds Effective Rate. The index-plus-a-fixed-spread is the all-in cost.
How do Floating-Rate Funding transactions work?
Funding is provided through rolling 4-week and 13-week CDs.
Balances remain fixed at agreed upon levels so long as the financial institution remains well capitalized.
A Floating-Rate Funding transaction is simple to execute for Promontory Network members.
Longer-Term, Fixed-Rate CDARS Funding.
Of course, if a financial institution is in the market for longer-term, fixed-rate, wholesale funding, CDARS has just the solution. With interest rates at historic lows, many institutions are trying to lock in fixed-rate funding. Through CDARS® One-Way BuySM, 26-week and 52-week funding, as well as other terms, can be purchased usually at rates significantly below alternative funding sources. This can be done with next-day settlement, and without the need to post collateral or purchase stock.
For more information about Floating-Rate Funding transaction rates or how to access fixed, wholesale funding through a CDARS One-Way Buy auction, please contact us.
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Banking on Communities
The Community Development Bankers Association (CDBA) and Promontory Interfinancial Network announced on December 9 that they will work together to channel more than $10 billion into America's most economically distressed communities over the next five years.
The announcement was made during a signing ceremony at the U.S. Capitol to formally renew the organizations' Banking on Communities program. Initiated in early 2004, the program channels funding into communities through banks certified by the Treasury Department as Community Development Financial Institutions (CDFIs).
Under the initiative, socially motivated investors – corporations, non-profits, faith-based organizations, individuals – and banks can receive $50 million or more of federal deposit insurance coverage when depositing funds in a community development bank that's a member of CDBA and the Promontory Network.
“Corporate America can do some good by channeling their deposits to Community Development Banks," said Dorothy J. Bridges, President and CEO of City First Bank of DC. "CDARS enables corporations, non-profits, and other socially motivated investors to put the organization's money on a social mission with complete security."
"The initiative has been a tremendous success for CDFI banks and the communities they serve," said William Dana, Board Chairman of CDBA and CEO of Central Bank of Kansas City, Kansas City, Missouri. "We launched the program in early 2004 with ambitious goals and are pleased to have exceeded those goals. Since its inception, more than $3.5 billion dollars have been channeled from depositors into community development banks (less than $1 billion is currently outstanding). Now that the program is fully up and running, we anticipate that number to be more than $2 billion annually."
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