United States

case studies
united states
city administration
financing & advisory

Major US city improves portfolio performance

Custody and securities lending services provide flexibility and transparency for financial management department

The challenge

The financial management department of one of the largest cities in the U.S., which oversees all of the cash, financial and investment activities of the municipality, needed to improve the performance of its $1 billion collateralized securities lending program.

The department sought to both offset growing budget constraints by generating additional revenue from its municipal fund and to increase the flexibility and transparency of it securities lending activities. In addition, after examining its legacy program it realized that it could realize greater economies of scale through a new custody arrangement.

The solution

Recognizing the market-tested benefits of a structured third-party agent securities lending program the city's financial management department chose Citi as its lending agent, and custodial services provider, during a competitive bidding process that included its incumbent.

In addition to ensuring that the fund conforms to the state's public investment act, Citi provides a broad range of services that include, for example:

  • Providing support and guidance for the program and all aspects of the lending process
  • Monitoring the credit quality of borrowers and collateral investments
  • Making investment recommendation to maximize earning within risk parameters
  • Providing counterparty credit risk assessments

One of the key benefits of the Citi solution is OpenLendSM, an open architecture securities lending solution that provide the city's treasury staff with customized tailored reports that cover their specific lending, collateral management, and investment requirements.

The OpenLend platform and Citi's securities finance reporting tool provide the city's fund managers with complete transparency into their lending activity and the ability to view purchases, sales and trades into their custody account, plus fees and revenue generation activities.

Bottom line, the city is better able to manage its funds assets and the revenue generation from its programs.

The result

The switch to a single provider for custodial and securities lending yielded immediate results. In just the first two months with Citi, the municipality's fund generated more revenue from securities lending that it had in the entire prior year.