Important: FG Capital Advisors arranges secured metal repo facilities through first-tier custodial banks and credit funds. Non-exchange receipts are financed only after full warehouse and documentation review.
Bank vs. Non-Bank Repo Financing for Metals: Who Offers the Better Deal?
Banks come loaded with cheap deposits and an alphabet soup of Basel ratios. Credit funds bring flexible mandates—and a steeper price tag. Which camp cuts the tighter repo for copper, aluminum, or nickel in 2025? Let’s lift the hood, crunch the numbers, and call out the tricks hiding in the small print.
1. Term Sheet Snapshot
| Metric | Bank Repo Desk | Non-Bank Lender |
|---|---|---|
| Advance Rate — LME Copper Cathode | 80–85 % | 70–90 % * |
| Haircut — Non-Exchange Aluminum Scrap | 25–35 % | 15–30 % |
| Pricing Basis | 1-m SOFR + 120–250 bp | 1-m SOFR + 350–750 bp or flat fee |
| Covenants | Full pack: cross-default, rating triggers, MAC | Targeted: borrowing-base, liquidity tests |
| Doc Speed | 4–8 weeks | 5 days–3 weeks |
*Top of range only after extra collateral comfort—think daily margins plus strict warehouse control.
2. Where Do the Dollars Come From?
• Banks.
Most desks borrow at SOFR flat or better via deposits and commercial paper. Low cost equals low margin. Downside? Balance-sheet real estate is rationed every quarter.
• Non-Banks.
They raise money through capital calls, leverage lines, and CLO-like structures. Higher input cost lands on your ticket. In exchange you get fewer hoops and often longer tenor.
3. Hidden Costs to Watch
- Warehouse Control Fees. Some banks bill a per-lot charge for tri-party control letters. That can slice an extra 15–20 bp off your carry.
- Interest-on-Cash Collateral. Non-banks may pocket the float on posted variation margin. Check the cash custody language.
- Make-Whole Clauses. Break early and a fund might slap on a 2-point penalty. Banks usually waive if the metal stays within the group.
4. When to Pick a Bank
• You need the rock-bottom coupon and can live with a heavier covenant stack.
• The collateral sits in LME sheds with pristine brand mix.
• You plan to keep tenor at 90 days or less—banks love short calendar risk.
5. When to Pick a Non-Bank
• You’re parking mixed-brand nickel plates nobody else touches.
• Speed matters—cargo on the water, cash needed yesterday.
• You want out-of-the-box structures: frosted inventory, sub-leased warehouses, even pre-sold metal.
6. FG Capital Advisors: What We Bring
Our desk canvasses both pools every day. We line up side-by-side quotes, highlight the covenants that sting, and fight the fee leakage. Send your warrant file before 15:00 London, get an indicative grid in your inbox by lunch the next day.
7. FAQ
Q: Can a bank match a fund’s 180-day tenor?
A: Sometimes—if you cap the drawdown period and pre-hedge.
Q: Will a non-bank finance sanctioned brands if held outside Russia?
A: Rarely. Most want full traceability on origin and shipping.
Q: Is margin posted in futures or cash?
A: We can carve either. Choice depends on collateral type and lender.
This document is marketing material and does not constitute legal, tax, accounting, or investment advice. All terms remain subject to credit approval and market conditions.
