compensating balance


Also found in: Dictionary, Financial.
Related to compensating balance: interest
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  • noun

Synonyms for compensating balance

a minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan

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References in periodicals archive ?
The Concentration Account Should Operate On A "target Balance" Basis, Whereby The Required Balance To Support Activity Charges Will Become The Compensating Balance.
The insured would then agree with its bank that the funds deposited by the insurance company would be applied toward reducing the insured's compensating balance requirement.
These clearing balances are similar to the compensating balances offered by depository institutions to their business customers.
Banks can optimize the value of these deposits, whereas mortgage bankers typically use them as compensating balances that reduce their cost of financing.
Traditional sources of commercial financing are not always accessible to small businesses, or may contain restrictive covenants like compensating balances or terms that are less than the economic life of the capital asset being purchased or constructed.
Clearing balances held at Reserve Banks are similar to compensating balances held at correspondent banks.
Jacobs observed that Triangle Surety Agency's new product enables its customers to maintain exposure to the financial markets, in contrast to the CDs or compensating balances generally required by banks.
Logically, companies get a better return on their cash when they can consolidate it, rather than let it sit at various subsidiaries; if they do cash management through a bank, they can use higher compensating balances as leverage for better terms or more services.
These corporate financiers told the banks in ever-increasing numbers that they preferred to pay a fee rather than be required to maintain what to them amounted to unproductive compensating balances.
In the mid-1970s, banks started eliminating compensating balances and raised corporate loan rates.
Provide a choice of receiving an invoice and paying directly for services or does it insist on payment through earned credit on compensating balances through account analysis?
The higher the earnings credit rate, the more the compensating balances are worth.
Those funds are used as compensating balances to reduce the rate of interest charged by the warehouse lender for the borrowed funds.
While the Company has agreed to register these escrowed shares, it cautions investors that these shares are being provided as collateral and compensating balances, and are not for immediate resale purposes.
The difference in these pricing levels is fully reflected in our reported financial results for the year and creates compensating balances with our hog producers.