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Securities Lending Overview

Optimize your revenue with securities lending

Your credit union has the opportunity to enhance its investment revenue with a comprehensive securities lending program from Alaska USA Trust Company.

Securities lending is a low-risk, yield enhancement strategy used to earn additional income from securities held in an investment portfolio.The goal of securities lending is to generate additional income, with emphasis on liquidity and principal preservation. Widely used by financial institutions, pension funds, and institutional investors, securities lending programs allow brokerage firms to "borrow" securities for a fee.

There are currently more than $1 trillion of securities on loan worldwide, generating more than $5 billion in annual revenue for participants. Alaska USA Trust Company can offer participation to credit unions with as little as $200 million in lendable securities, allowing them to derive the benefits usually available only to larger institutions. Additionally, because Alaska USA Trust Company's securities lending program is for "credit unions only," it is fully compliant with NCUA regulations.

Securities lending for your portfolio

Easy to set up. Easy to administer.

When you employ Alaska USA Trust Company as your securities lending agent, there is very little to do on a daily basis. The Alaska USA Trust Company program has agreements, procedures, daily monitoring and reporting tailored specifically to your credit union's needs and investment policies. In addition, Alaska USA can provide assistance in educating executives, board members and financial managers about this investment strategy.

Income over-and-above expected returns.

Simply put, credit unions can earn a steady stream of fee income on the securities that Alaska USA Trust Company loans to approved counterparties. The amount received varies with the type of securities, the demand from borrowers, the general interest rate environment, and the type of securities taken as collateral.

How securities lending works.

Investment brokers or dealers frequently need to "borrow" securities to cover short positions and to use these securities as collateral to help them finance their balance sheet. For this they pay a fee. The credit union, as the lender, never gives up "beneficial ownership" of the securities loaned.This means the credit union still gets the income and principal from the securities, in addition to the fee paid by the borrower. Additionally, since it never relinquishes ownership, the credit union can sell the securities at any time.