Standby Letters of Credit – A Low-Cost, High-Reward Solution for Procuring Public Deposits
last updated on Wednesday, May 13, 2020 in Letters of Credit
It’s no secret that the Federal Home Loan Bank of Des Moines is best known for its Advance products, but did you know we have a lesser known product that is helping our members lower on-balance sheet liquidity costs and attract public funds? We’re talking about Standby Letters of Credit (SBLOCs). If you’d like a detailed explanation of SBLOCs we would highly recommend this whitepaper. SBLOC’s that are written in favor of public depositors serve as excellent substitutes for other means of satisfying collateralization requirements, including pledging of marketable securities.
Here are the most common cases in which our members and their public depositors frequently conclude that SBLOC’s are an optimal vehicle for satisfying collateralization requirements:
The above scenarios illustrate how SBLOCs could be used to help your institution strengthen public deposit relationships and strengthen your on-balance sheet liquidity. The mechanics of our Standby Letter of Credit program is thoroughly detailed in this whitepaper, or feel free to reach out directly to your Relationship Manager.
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- Standby Letter of Credit
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