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Acquire LCR-friendly deposits.

Convenient options to improve your bank’s liquidity coverage ratio.

With IntraFiSM Network DepositsSM, your bank can more effectively manage liquidity, moving deposits with higher outflow rates off balance sheet and receiving deposits with lower outflow rates on balance sheet. Here’s how: Your bank can exchange higher-outflow-rate deposits for lower-outflow-rate deposits from other network banks (using the reciprocal option). Or, it can sell higher-outflow-rate deposits for fee income (using the One WaySM option). Both choices can help your bank to improve its LCR.

Reciprocal Deposits

  • Keep the customer relationship but exchange customer deposits for other deposits that potentially have a lower outflow rate.
  • Most reciprocal deposits are treated as core deposits up to the lesser of $5 billion or 20% of liabilities for a well-capitalized bank.
  • Reciprocal deposits arrive in large chunks (six, seven, eight, or even nine figures at a time) that are eligible for multi-million-dollar FDIC insurance.
  • No collateralization is needed.

One Way

  • Sell deposits that have a higher outflow rate.
  • Maintain ownership of the customer relationship, selling only the underlying funding.
  • Earn fee income.
  • No collateralization is needed.

Banks that want funding can also buy deposits with a lower outflow rate.

Lower opportunity costs associated with HQLA securities.

By lowering its net cash outflow amount, your bank can reduce the amount of High Quality Liquid Assets (HQLA) it is required to keep on balance sheet. It can invest funds previously tied up in HQLA securities in potentially higher-yielding loans and leases, growing profitability and net interest margins in the process

 

An Illustrative Case Study

Reciprocal deposits case study showing how a bank can reduce required holdings of HQLA securities and increase net income

Contact us to learn more about how IntraFi Network can help your bank strategically grow its balance sheet.

 

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The illustrative case study is for information purposes only and is based on the stated assumptions. Actual results will vary.

1. Assumes that all the reciprocal deposits are classified as reciprocal brokered deposits under the LCR rule.
2. Assumes 275 bps spread between new loan and lease yields and weighted average HQLA portfolio yield.
3. Represents fee paid to IntraFi Network. Fee subject to change.
4. Assumes equity / assets ratio of 9% for illustrative purposes