Fall Regulatory Summit

Internal Use Only

IntraFi - Drop in Ratings/LTWC

ƒ IntraFi does not remove existing deposits from a bank merely because the bank’s ratings have dropped or because the bank has become less than well capitalized (LTWC). ƒ If a bank is using One-Way Buy and its ratings drop, but the bank is still well capitalized, IntraFi works with the bank to manage future balances in a manner consistent with the bank’s ratings. ƒ In keeping with the reciprocal deposits legislation, if a bank that holds reciprocal deposits becomes LTWC, the bank can maintain existing reciprocal deposits. The bank can also accept new reciprocal deposits, but only in an amount that does not cause the total balance of reciprocal deposits to exceed the previous-four-quarters average from when the bank first became LTWC, or its CAMELS ratings dropped below a 1 or 2. If the bank’s total balance of reciprocal deposits is already higher than the previous-four-quarters average, the bank cannot accept new reciprocal deposits until withdrawals of existing reciprocal deposits cause the balance to be less than the previous-four-quarters average. (The bank could also receive additional reciprocal deposits if it obtains a waiver.) ƒ If a bank is LTWC and its total balance of reciprocal deposits is at or above the previous-four-quarters average (and the bank has not obtained a waiver), all new deposits that the LTWC bank places through ICS must be placed through One-Way Sell without receiving deposits in return.

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Internal Use Only

IntraFi - Drop in Ratings/LTWC (cont.)

ƒ The allocation engine will leave existing deposits on the balance sheet of the LTWC bank unless one of the following occurs: ࡳ A customer of the LTWC bank withdraws funds that were placed on a reciprocal basis or liquidates an account containing such funds, in which case the corresponding amount of reciprocal deposits is removed from the LTWC bank. ࡳ A customer for which another participating institution placed funds that are reciprocal deposits at the LTWC bank withdraws funds or liquidates an account, and the withdrawal or liquidation requires removing funds that have become reciprocal deposits at the LTWC bank. Such a customer’s withdrawal or liquidation will be satisfied with funds of the customer placed at other banks to the extent feasible before funds are removed from the LTWC bank.

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