New government regulations make loads of extra cash a burden for banks, which have privately urged major clients to take their deposits elsewhere or face fees, The Wall Street Journal reported late on Sunday.
The banks include JPMorgan Chase (JPM), Citigroup (NYSE:C), HSBC (London Stock Exchange: HSBA-GB), Deutsche Bank (XETRA:DBK-DE) and Bank of America (BAC), sources familiar with the situation told the Journal.
Deposits have been a key part of banking, and have traditionally been free for large clients, the paper said.
New U.S. banking rules that take effect on Jan. 1 require higher minimum reserves to protect banks from sudden outflows during a situation like the 2008 financial crisis, the paper said. Those requirements make holding large, uninsured deposits more expensive for banks, which pass on those costs as client fees of possibly several thousand a year.
Corporate sources told the paper that their institutions must accommodate greater expenses or push their funds to riskier savings instruments.
Since federal deposit insurance covers up to $250,000, retail deposits should not be affected, the Journal said.
The European Central Bank's decision to charge firms for holding cash at the ECB has resulted in fees for euro deposits by institutional clients at banks such as JPMorgan Chase and Bank of New York Mellon (BK), the newspaper said.