In contrast to a recent move by Bank of New York Mellon Corp., Northern Trust Corp. will not charge its institutional clients a fee for increasing their balances on deposit accounts.
"We have not and are not considering any kind of fee. We think that would penalize our clients," Rick Waddell, Northern Trust's chairman and chief executive, told investors and analysts at Barclays Global Financial Services Conference in New York Tuesday. "We've tried to manage the capital strength of the bank ... to weather these kinds of periods of great uncertainty and to allow our clients to use the balance sheet even when we can’t earn any money at it."
Chicago-based Northern Trust and BNY Mellon are custody banks that cater to institutional clients and wealthy households. Like many banks, both have seen a surge of deposits as clients continue to view banks as a safe haven from the volatile stock and bond markets.
To mitigate the cost of managing all those deposits, BNY Mellon announced in August that it intends to start charging a 0.13% interest rate fee to customers with more than $50 million in deposits.
Waddell, though, said he believes customers should be free to park their deposits in the bank without it costing them money.
"We want to be able to allow our clients if they want the safety and soundness of a Northern Trust balance sheet to feel that they can put those deposits with us and I think that serves us well over the long term," Waddell added.
Waddell also said at the conference that Northern Trust is expanding its private-banking operations by opening a branch in Washington, D.C. He said that Washington has the fastest growing population of millionaire households in the country.
