Illinois banks are getting the opportunity to bid on $1 billion in funds that the state Treasurer is shifting to banks from other investments. On Oct. 16, Treasurer Alexi Giannoulias said he would transfer the money from low-yielding investments.
Individual banks can request up to $25 million for deposit in interest bearing accounts. By Oct. 29, sixteen banks had requested nearly $100 million. The Illinois State Treasurer lists the banks on its web site.
Giannoulias said he is making $500 million immediately available and that the remainder will be made available incrementally between December and next March. Deposits are collateralized at 102 percent to 110 percent.
Giannoulias implemented the plan by expanding an existing Illinois program called The Treasurer's Access to Capital program. It allows banks and credit unions to request state deposits at market rates which are published each morning on the Treasurer's web site based on market conditions. The state deposits are limited to no more than 10 percent of a bank's total deposits with no more than $100 million going to any one bank.
On Oct. 31, the Treasurer's web site was requesting an interest rate of 3. 18 percent on one-year deposits.
Broadway Bank in Chicago, which is owned by the Giannoulias family, is not participating. The state Treasurer manages an investment portfolio of about $8 billion.
Source: Northwestern Financial Review
