The statements follow news that rival custodian Bank of New York Mellon Corp. told customers it would start charging for increases in some deposits over $50 million, a sharp move as banks see deposits pile in.
The representatives from State Street and Northern Trust did not comment further on any customer pricing decisions.
Wells Fargo & Co., the nation’s second-biggest deposit holder after Bank of America Corp., doesn’t charge corporations to hold deposits, a spokeswoman said, and added the bank has “no plans to charge our customers for increasing their deposit balances.” Some retail consumers are charged a fee to maintain an account, but not specifically for deposits. Wells Fargo, like most retail banks, pays interest on many consumer deposits.
A spokesman for U.S. Bancorp, which has a smaller custodial operation than Bank of New York Mellon or State Street, said the bank hasn’t changed its policy.
A spokeswoman for Citigroup Inc. said, “While it is not our policy to discuss client pricing, deposits are priced in line with market rates.” Citi is a major competitor of Bank of New York Mellon in the custody business, and moves trillions of dollars around the world for global businesses and the U.S. government. Some of that money stays temporarily as deposits.
A representative from JPMorgan Chase & Co., a large custodian, wasn’t immediately able to comment.
Bank of America, which also has a custody business, did not comment Thursday.
Deposits at State Street, which deals with large corporate clients and other banks as customers, soared during its second quarter. Deposits as of the end of June were up $18 billion, or 17%, from the end of March, and up more than $27 billion year to date. BNY Mellon said it is incurring costs such as deposit insurance on the surge of deposits, but is having difficulty investing the money to earn a return.
With markets in turmoil, and U.S. Treasuries yielding slim amounts, large cash holders have been parking their cash in banks. BNY Mellon said clients have been seeking a safe harbor, and it was notifying customers with “extraordinarily high” deposits it could charge 0.13% on deposits.
Banks, meanwhile, have little opportunity to put money from clients to work. Loan demand from businesses is improving slightly but remains weak overall, and securities are considered risky.
As of June 30, deposits at domestic commercial banks rose 5.1% from a year earlier, to $7.1 trillion, while loans fell 2.2%, to $6.1 trillion, according to data provided by the Federal Reserve.
JPMorgan Chase had $170 billion of deposits parked at central banks at June 30.
