Citi and IntraFi team up to help businesses move money to foreign banks

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Citigroup is teaming up with fintech IntraFi to create a new service that will allow Citi’s corporate and institutional clients to sweep away any excess cash they have at U.S. branches of foreign banks. The service, dubbed Yankee Sweep, is designed to help corporate customers better manage their money and earn higher returns on deposits, Citi said when announcing the partnership Monday.

Citi’s Treasury and Business Solutions group holds more than $670 billion in deposits from large corporate clients, financial institutions, public sector entities and middle market clients. It offers cash concentration services that allow clients to automate the movement of money around the world and between their subsidiaries.

A typical large enterprise customer may have more than 100 accounts with Citi, with assets of $2.3 trillion, in different countries.

“One of our clients’ goals is to consolidate that cash at the end of each day in different jurisdictions so that they can then cover any overdrafts they may have and invest any excess,” said Michael Berkowitz, head of liquidity in North America. management in Citi’s treasury and commerce solutions.

He declined to say whether the bank had received many requests to transfer money out of Russia.

Citi’s corporate clients are looking to become more efficient with their money, Berkowitz said.

“They’re looking to digitize their processes and we’re also looking to digitize processes for them,” Berkowitz said. “They aim to obtain the best possible return while ensuring an adequate level of liquidity. They want to easily transfer money from one country to another in an automated way.

Customers using Yankee Sweep will be able to distribute excess cash to a small number of foreign banks with branches in the United States, through an account with Citi.

US branches of non-US banks are generally willing to pay an attractive return for excess cash, Berkowitz said. He declined to say what the typical return on those accounts might be.

“We’re able to provide clients with a return in excess of what they would earn on money market funds,” Berkowitz said.

Citi’s clients will bear the counterparty risk of the underlying institutions.

“We select financial institutions that have strong credit ratings that are generally comparable to those of Citi and other major local institutions,” Berkowitz said. He also pointed out that through the Yankee Sweep service, these clients also manage to diversify their counterparties.

“IntraFi also has algorithms that they use to meet the needs of our underlying corporate customers as to where to allocate excess cash, as well as to meet the funding needs of these third-party financial institutions,” Berkowitz said. “As we grow our customer base and there are more third-party financial institutions, determining how much money should go to a given bank on a given day is increasingly complex, based on new flows. to the Account.”

The bank is doing a technology integration with IntraFi that will help automate the movement of funds from Citi to destination banks.

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