Promnet Reverse Repo for Banks
Using the Promnet Reverse RepoSM service, banks can offer customers valuable benefits while keeping deposits and securities off balance sheet and gaining more control over their cost of funds and liquidity. Banks can:
- Avoid turning away customers whose deposits may otherwise negatively impact the balance sheet
- Offer customers daily liquidity, the opportunity to earn a return, and safety
- Enjoy fee income—your bank can receive a fee based on volume
How Promnet Reverse Repo Works
A bank, as the Relationship Institution, enters into repurchase agreement transactions as agent for its customers. The customer enjoys the security of having their funds backed by U.S. Treasuries (to 101-102%) or by Agency MBS (to 103%), daily liquidity, and the opportunity for returns. The custodian, BNY Mellon, holds cash and securities and sends or receives funding by wire. For the Relationship Institution, this is an off balance sheet transaction—funds and securities do not reside on the bank's balance sheet and the bank retains the customer relationship.
How Promnet Reverse Repo and ICS Can Be Offered Together
Promontory offers banks the ability to insure up to a certain limit per customer with the Insured Cash Sweep® service. If a customer's deposit exceeds the limit, the customer can use the Promnet Reverse Repo service for the excess. While there is no requirement to use ICS® before accessing Promnet Reverse Repo, using both services can enable banks to accept larger customer deposits without burdening the bank balance sheet with highly liquid deposits.
Use Promnet Reverse Repo and ICS Together to Offer Customers a Superior Cash Management Solution
Both Promnet Reverse Repo and ICS are easily accessed by banks via the Promontory Transaction and Reporting Portal. A portion of a customer's deposit can be placed through the ICS service into deposit accounts at FDIC-insured institutions. A bank can move deposits off balance sheet with ICS® One-Way Sell® or retain the full amount of the deposits on balance sheet with ICS®ReciprocalSM as liquidity needs dictate.
With the Promnet Reverse Repo service, a Promontory Network bank can use one portion of a customer's deposit to effect repurchase agreement transactions for its customers.
Read more about how Promnet Reverse Repo and other Promontory Services can help banks manage liquidity and build valuable relationships.
Use of the CDARS and ICS services is subject to the terms, conditions, and disclosures set forth in the applicable program agreements, including the applicable Participating Institution Agreement and Deposit Placement Agreement. Limits apply, and customer eligibility criteria may apply. lCS program withdrawals are limited to six per month when using the savings option. A depositor is responsible for excluding from eligibility to receive its funds through CDARS or ICS any FDIC-insured depository institution at which it has other deposits in the same insurable capacity.
ICS, Insured Cash Sweep, CDARS, Certificate of Deposit Account Registry Service, IND, Insured Network Deposits, and Yankee Sweep are registered service marks of Promontory lnterfinancial Network, LLC. Promnet Reverse Repo is a service mark of Promontory lnterfinancial Network, LLC.
The Promnet Reverse Repo service is provided by Assetpoint Financial, LLC, a wholly owned subsidiary of Promontory lnterfinancial Network, LLC, and a member of FINRA and SIPC. Use of the Promnet Reverse Repo service is subject to the terms, conditions, and disclosures set forth in the applicable program agreements, including the Promnet Reverse Repo Service Agreement. Assetpoint Financial, LLC does not purchase or sell any securities in connection with repurchase agreement transactions effected using the Promnet Reverse Repo service.