ICS Reciprocal for Banks
WHAT IS ICS RECIPROCAL AND HOW DOES IT WORK?
Banks that offer ICS®, the Insured Cash Sweep® service are part of a special network—the Promontory Network. Using ICS, banks can attract loyal, large-dollar, locally based relationships by offering safety-conscious customers access to multi-million-dollar FDIC insurance for funds placed into demand deposit accounts, money market deposit accounts, or both.
Working directly with just one relationship bank (a Promontory Network member), a customer can use ICS to submit funds for placement into deposit accounts at other FDIC-insured banks (also Network members) in increments below the standard FDIC maximum of $250,000. This enables a customer to access FDIC insurance through multiple banks while consolidating the deposit relationship at a single bank and receiving one regular statement from that bank.
With ICS Reciprocal, banks receive matching deposits; funds are exchanged on a dollar-for-dollar basis (thus the term “reciprocal”) so that each bank comes out whole and can use the full amount of a customer’s deposit for lending in the local community. (Don't think you will always want to keep the full amount of deposits on balance sheet? Then, please also read about the ICS® One-Way Sell® option, which enables banks to take excess ICS deposits off balance sheet by selling them to banks that desire funding, and know that institutions can switch back and forth between keeping and selling funds as their liquidity needs change.)
With ICS Reciprocal, relationship banks maintain control over the interest rate, setting it themselves, as well as ownership of the customer relationship. Confidential customer information is not shared with other banks except for the custodian.
MOST RECIPROCAL DEPOSITS ARE NONBROKERED
As a result of a new law, the Economic Growth, Regulatory Relief, and Consumer Protection Act, most reciprocal deposits are no longer treated as brokered deposits. Now banks have an even greater opportunity to use reciprocal deposits to grow high-value relationships and franchise value. Read why the new law is a game changer for banks and communities and what bankers have to say about the opportunity.
WHY DO BANKS CHOOSE ICS RECIPROCAL?
With ICS Reciprocal, banks can
- Add relationship-based funding that increases franchise value
- Attract deposits in larger increments
- Easily replace more cumbersome and expensive funding options (e.g., traditional repo sweeps and letters of credit) so existing relationships are more profitable
- Improve profitability and asset liquidity by repurposing funds invested in collateral into higher-earning assets
ICS RECIPROCAL DEPOSITS CAN BE A SOURCE OF COST-EFFECTIVE FUNDING
ICS reciprocal deposits compare favorably to other funding choices, such as listing service deposits, collateralized deposits, and wholesale funding purchases.
 Includes wholesale funding sources, such as FHLB advances, traditional brokered CDs, and correspondent banks. Does not include wholesale funds purchased through a deposit network.
 A bank receives ICS Reciprocal deposits in return for deposits that it places, most of which are locally-sourced.
 Noncollateralized deposits reduce collateral tracking and free up bank capital for more productive uses.
 In times of high liquidity, a bank using ICS Reciprocal can easily switch to ICS® One-Way Sell® to take deposit amounts off balance sheet while earning fee income.
DISCOVER WHAT DIFFERENTIATES INSURED CASH SWEEP AND WHY BANKS CHOOSE IT
Download a summary of how ICS differs from competing offerings
Promontory Network will use your information solely to provide you with information about Promontory Network services. We will not provide your personally identifying information to third parties.
In addition, banks can find out more about ICS by registering for a free webinar, ICS and CDARS®: Taking Advantage of New Opportunities.
Use of the ICS service is subject to the terms, conditions, and disclosures set forth in the CDARS-ICS Participating Agreement and Deposit Placement Agreement. Limits and customer eligibility criteria apply. Program withdrawals are limited to six per month when using the ICS savings option. ICS, Insured Cash Sweep, One-Way Sell, and CDARS are registered service marks of Promontory Interfinancial Network, LLC.