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#1993712 - 02/05/15 03:20 PM ZBA accounts
Laura S Offline
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Joined: Nov 2012
Posts: 32
Chicago suburb
It seems to me that there used to be a reason why we as a bank would not allow customers to have zero balance accounts (ZBA). Does anyone have them, and what are the difficulties associated with these? We have a customer who wants to keep account A at zero, and sweep funds from account B to cover the checks that clear account A.

Can anyone enlighten me with this topic? When I hear ZBA or SWEEP accounts, I get a bad feeling, but perhaps this is left over from years ago with regulators. Again, any insight on these types of accounts, would be helpful.


By the way, we do NOT have any specific account type set up for this, nor do we have any 'agreements' that the customer would sign. You know how it is when account officers get creative with their customers - it's like the Wild Wild West. smile


Thanks

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#1993720 - 02/05/15 03:27 PM Re: ZBA accounts Laura S
osucpa Offline
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Yes have numerous zba and sweep accounts. We offer both on balance sheet and off balance sheet sweep accounts.

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#1994083 - 02/06/15 03:04 PM Re: ZBA accounts osucpa
Elwood P. Dowd Offline
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Can you (or anyone else) explain what your bank's rationale is in offering them?
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#1996957 - 02/19/15 06:40 PM Re: ZBA accounts Laura S
Laura S Offline
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Joined: Nov 2012
Posts: 32
Chicago suburb
Ken, can you tell me why you would NOT offer them?

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#1996958 - 02/19/15 06:41 PM Re: ZBA accounts Laura S
Elwood P. Dowd Offline
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Because they increase expenses and do not increase revenue?
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#1997163 - 02/20/15 02:47 AM Re: ZBA accounts Laura S
rlcarey Online
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rlcarey
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Galveston, TX
do not increase revenue

Well, sure they do if you price the product correctly.
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#1997176 - 02/20/15 09:41 AM Re: ZBA accounts rlcarey
Elwood P. Dowd Offline
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Can't argue with that. Any fee charged for maintaining a zero balance account would be the compelling part of the "rationale" I asked about a couple weeks ago, but have yet to see. "It's what the customer wanted" doesn't make my scales move.
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#1997177 - 02/20/15 10:32 AM Re: ZBA accounts Laura S
rlcarey Online
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rlcarey
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Galveston, TX
We use to have such accounts under a cash management umbrella. A corporation might have one single operating account but would have a number of subaccounts for various purposes, such as one for each store, etc. All monies in the subaccounts would be transferred to the main corporate account on a daily basis resulting in a series of accounts that were labeled as ZBA accounts since they never had any money left in them. The overall relationship would then be appropriately priced. Like all things, this is not a product offering that you do on a one-off basis and hope to make any money.
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#1997178 - 02/20/15 10:55 AM Re: ZBA accounts rlcarey
Elwood P. Dowd Offline
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Just as you say, if it's part of a bank-designed product or service and is included in the price, fine. If it's a "one off," the bank empowered the wrong person to make decisions.

P.S. On review, it occurs to me that I was focusing on the title of the thread, but the question might have actually been about sweep accounts that sare tied to savings deposits that are subject to restrictions on activity. If so, they did represent a compliance issue at one time, but banks that have kept up with the times do not offer them anymore; they are simply an anachronism that was easily replaced with a single interest bearing DDA.
Last edited by Ken_Pegasus; 02/20/15 09:25 PM. Reason: Add P.S.
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