Hi- Can anyone please tell me if you see any regulatory issues with the following scenario:

As it relates to HELOCs, the bank would like to provide different rates for customers with a deposit relationship v. a customer without a deposit relationship (transaction account which can be personal or business).
-customer: prime + zero, and no floor
-non deposit customer: prime + 1.75 and include a floor

Thank you!

It's not based on a discriminatory basis, so I see no issue with a better rate for a current customer.

What will you do if the potential customer opens a deposit account in order to obtain the better rate and then subsequently closes it...do you have a process in place to cover the "what ifs"?

Have you done any kind of demographic analysis of your depositors? If this group of people mirrors the general population in your service area, then you should have no problem with regulators. If it doesn't (or you don't know), you're going to have a hard time explaining why the practice isn't greenlining.

I don't see a problem with rates being lower for customers than non-customers. Relationship pricing has been around for as long as I can remember and I don't recall any regulatory criticism for it.