BankingFX
September 24, 2020

Talking Shop: Methods for Pulling Cross Rates From Central Bank Published Rates

Question: How does your company pull cross rates that are required to be pulled from central banks’ published rates?  “Looking for some teams to benchmark on how you all pull the cross rates that are legally required to be pulled from central bank published rates. Pulling these rates from central banks’ websites is inefficient and we wanted to know how others are doing this.”  Peer Answer 1: “We use Bloomberg’s data license program to get the rates via a file and upload them automatically to our enterprise…
BankingCOVID-19
September 22, 2020

Reality Check: Banks Dial Back PPP Loan Forgiveness Expectations

Delays in applications and action by Congress will affect banks’ NIM and NII forecasts.Forget about forgiveness until early 2021. That, in a nutshell, was among the takeaways from a recent conversation between members of NeuGroup’s Bank Treasurers’ Peer Group. The forgiveness at issue is for loans that banks made under the federal government’s $669 billion Paycheck Protection Program (PPP), part of the CARES Act enacted to help small businesses struggling during the pandemic.The loans can be forgiven if companies used…
BankingCash & Working Capital
September 17, 2020

Talking Shop: The Philosophy of Fees on Revolving Credit Facilities

Question:  “Do you pay the same arrangement fee for a 364-day revolver renewal as for a 5-year renewal?” “We executed our first 364-day revolving credit facility last year (in addition to a five-year) and it is time to renew the 364-day facility. We only have 50% of the banks participating in the 364-day renewal. We were thinking to pay a proportionate amount of arrangement fees to the lead banks. I don’t think they have to do very much since we…
BankingLibor SOFR
September 15, 2020

Excitement Borne of Frustration Greets Ameribor 30-day Term Rate

Bank treasurers facing Libor’s end welcome news on a forward rate from the AFX. Libor’s days are numbered and bank treasurers eager for the development of a forward-looking, term interest rate that has a credit component got some good news last week: The American Financial Exchange (AFX) announced an indicative 30-day forward rate called Ameribor30 whose base rate is overnight Ameribor, which reflects the unsecured borrowing costs of more than 1,100 American lenders.“I’m pretty excited about it,” one member of…
Accounting & DisclosureBanking
September 10, 2020

Pandemic Clouds CECL’s Impact on Corporate Loans and Lending

New accounting may prompt more conservative lending terms post-Covid. FASB’s new accounting for loan-loss reserves, current expected credit losses (CECL), directly impacts banks and other lenders and ultimately the loans they provide. Tim McPeak, principal industry consultant in the risk research and quantitative solutions division of SAS, the data analytics provider, said that the current pandemic and economic downturn have blurred the impact of CECL, effective for larger banks and most public companies since the start of 2020.Nevertheless, CECL will be…
BankingCapital MarketsInvestment Management
August 27, 2020

Ripple Effects: Will Institutional MMFs Start Waiving Fees to Stay Above Water?

Rock-bottom rates have pushed retail money funds to waive fees, and institutional funds may be next.The Wall Street Journal this week gave prominent play to a story headlined “Money Funds Waive Charges to Keep Yields From Falling Below Zero.” That piqued our interest. Money market funds (MMFs) are a staple of many treasury investment managers and an important product for many of the banks that help corporates manage short-term cash.MMF yields have plummeted. Seven-day net yields for the average money…
BankingLibor SOFR
August 25, 2020

Leaving Libor in the Dust: Look for SOFR Loans in Early 2021

Banks could price corporate loans using SOFR sooner than ARRC best practices suggest. The Alternative Reference Rates Committee (ARRC) guiding the US transition for cash products is pushing for Libor pricing to cease for certain types of debt by the end of this year, and other types of debt may soon follow. Floating-rate notes, for example, should be priced by year-end using an alternative benchmark, according to best practices published in late May by the ARRC, which comprises mostly large banks…
BankingTreasury Management
August 25, 2020

Waiting Game: Fed’s Update on Dividend Regs Reflects Increased Back-and-Forth With Banks

Earnings hold the key to whether a bank qualifies for “expedited consultation” with regulators. Recent clarification by the Federal Reserve about the timing of regulatory reviews of dividends paid by banks has raised a few questions and concerns for members of NeuGroup’s Bank Treasurers’ Peer Group.  Even before the guidance, banks have delayed or considered delaying their dividend declaration dates to provide more time for back-and-forth with regulators over the payout. Experience suggests that approaching the Fed with a concrete plan…
BankingCash & Working CapitalTechnology
August 18, 2020

Turning to Kyriba for Payments Helped One Treasury Centralize Operations

The benefits of using one TMS for treasury payments and retiring a homebuilt infrastructure. One member of NeuGroup’s Global Cash and Banking Group recently shared the benefits of using Kyriba as a payment factory that handles about 85% of his company’s treasury payments. The advantages boil down to saving time while improving controls, oversight, visibility and efficiency, he said.Ultimate goal. The treasury director said his company used Kyriba as a tool to achieve the primary goal of centralizing treasury operations…
BankingCapital MarketsLibor SOFR
August 13, 2020

Life After Libor: Ameribor Holding Its Own as Regulators Back SOFR

Banks already price commercial loans over Ameribor and a term version is in the works. Ameribor, the benchmark alternative interest rate to Libor devised by the American Financial Exchange (AFX), is managing to stay in the conversation despite the endorsement by the Federal Reserve of the secured overnight financing rate (SOFR). Ameribor reflects the unsecured borrowing costs of more than 1,100 American lenders. This week, Citizens Financial Group, one of the nation’s 20 biggest banks, with assets of $177 billion, joined…