Bank of New York Co. has a long tradition of serving large corporations with cash management accounts. Now it is pushing to make its service, known as CheckInvest, better known to small businesses.
The bank's newfound interest comes as small businesses have demonstrated a growing need for cash management services.
"Small business has gotten more sophisticated," said Christopher J. Taylor, the Bank of New York senior vice president responsible for small- business banking. "Rather than having their cash sitting idle in a checking account, they want growth."
Still, Bank of New York is specific about how small is small.
"It's a $20,000 target balance - it's not something that Joe's Stationery Store is going to use," Mr. Taylor said.
He added that most accounts set a balance of $30,000 before a sweep is made.
Similar accounts for entrepreneurs and middle-market business are pitched in the New York metropolitan area by Merrill Lynch & Co., which offered the first cash management account in 1972. Merrill's accounts have no minimum balance, but $20,000 is required to open them.
Bank of New York's new focus on small businesses is somewhat symptomatic of a structural realignment it undertook last year.
The bank now concentrates on lines of business for all regions, instead of segmenting management by region only.
Money market, government, and tax-exempt funds managed by the bank itself and by Dreyfus, Goldman Sachs, Alliance Capital, and AIM Management are offered for the sweep. CheckInvest customers choose one fund out of the 12 currently available.
Bank of New York officials said they are not worried that the overflow of assets from checking to money markets would have a negative impact on deposit levels.
"On the surface, it may seem like converting certificates of deposit to mutual funds," Mr. Taylor said. But though "you may lose some certificates of deposit money ... you're introducing much more money to the bank on a net by net basis."
