Derivative Partners, our affiliate, is a white label provider of derivative products to the financial services market. Our focus is offering smaller to mid-sized banks an opportunity to provide basic derivative products and services to their clients. Banks can benefit from offering Swaps, Caps and Collars to their clients without bearing the heavy cost of running an operation. Derivative Partners will run the complete operation from training and marketing through execution and post trade documentation.
By being able to offer even the most basic derivative products, bank relationship managers have a leg up on the competition. In this competitive lending environment the ability to offer a customized hedging solution can be the deciding factor for borrowers in choosing a bank.
Swaps and other derivative products also have significant accounting and legal advantages over conventional fixed rate loans. Not only are margins enhanced when adding the Swap product with the loan, but the profit is recorded as upfront non-interest income rather than amortized interest income. Furthermore, there are special "carve-out" exemptions for Swap obligations in the bankruptcy code that mean banks are more likely to recover funds in a default scenario.
Our white label program has been proven superior to what's offered by other private label providers. Our documentation is much more borrower-friendly and makes closing transactions easier. It is also time and customer tested – it's been in use with more than 800 corporate borrowers for more than 6 years. Our revenue generation leads the marketplace in success to companies of $25MM sales or less.