Money market service has much to offer

Press, 5 July 1983, Page 28

Money market service has much to offer

By

RICHARD NEWTON-KING,

National Money

Market Manager

BROADBANK’S money market involvement is with helping corporate and individual clients in the balancing of large short-term cash surpluses and deficits. T'hp nnprutinn cnvprc four nvpr” pvatv thrAA mnnth<

main areas: •Taking of large short term deposits. Deposits are taken from any source but with a minimum normally imposed of $20,000. There is no upper limit, with the average-sized corporate deposit being about $250,000. The term of deposits taken normally ranges from overnight to three months. This can sometimes be extended out to six or nine months, to six or nine months. Notice that repayment of an overnight or “call” deposit is required must be given before 11 a.m. on the day. Regulations which are still in force set an upper limit to the rates that can be paid. Before their introduction, rates were solely determined by market forces. It is a volatile market and rates can fluctuate daily within the upper limits imposed at present.

•Laying off short term advances. “Lay offs”, or advances, are made for terms ranging from overnight up to one month. Clients are usually public or large private companies with the minimum size of advance being $250,000.

•Providing commercial bill or promissory note finance. Bill finance is mainly extended to public or large private companies to take care of seasonal fluctuations in liquidity or temporary working capital requirements. There are two types of bill facility -

Committed: We commit to provide bill finance on demand for a period of one year or more. Bills are “rolled

over” every three months if

required. “Best effort" bills: We have a limit with the client and will provide bill finance on demand subject to funds being available and both parties agreeing to a rate.

Promissory note finance is available for the largest public companies and some semiGovernment institutions. •Sale of bills and promissory notes. The money market holds a portfolio of commercial bills and promissory notes. The minimum denomination of commercial bill sold is $20,000 and for a promissory note either $50,000 or $lOO,OOO. Commercial bills are normally available with maturities between one and three months. Rates are competitive and the process of purchase is simple. The bill can be either handed over to the purchaser for him to collect through the banking system or can be held by the money market and the proceeds credited to his account on maturity.

The merger of Broadbank and Broadlands and the development of the new trust deed will provide money market clients with major benefits.

•All deposits are fully secured under the terms of the new trust deed.

® Buyers of all bills which are accepted or endorsed by Broadbank have the normal security of all parties liable on the bills. In addition, because these bills are an actual or contingent liability they are also covered by Secured Debenture Stock.