Banks Pay Up on Deposits Says WSJ
The Wall Street Journal published "Wealthier Depositors Pressure Banks to Pay Up." The article discusses how, "Large U.S. banks are starting to pay up to keep depositors from moving their money, the latest sign that customers are growing more demanding as the economic recovery takes hold." It points out that, "`The average rate paid by the biggest U.S. banks on interest-bearing deposits jumped to 0.40% in the third quarter, the highest level since 2012 and the biggest quarterly increase this year, according to research firm Autonomous. Banks capacity to take advantage of ultralow interest rates is coming under pressure as more-sophisticated customers weigh other options for holding their cash, such as money-market funds that tend to pay higher rates than bank deposits. In reviewing third-quarter results, bank executives said that the pressure for higher rates came primarily from wealth-management customers, typically well-to-do individuals and families who deposit cash as part of their investment accounts." The Journal explains that, "Wealth-management deposits declined at big banks in the third quarter for the first time in several years, Autonomous said. At Bank of America Corp. , J.P. Morgan Chase & Co., and Wells Fargo & Co., such deposits fell on average by 4% from a year ago, even as deposits overall grew 5%, according to company results." The piece adds, "Morgan Stanley this quarter said earlier this year it started paying 0.06% on some investment cash in deposit accounts, up from just over 0.01%. It added that it was in the process of building out more certificates-of-deposit and savings-account products." (See also Crane Data's Oct. 12 News, "Wells Bumps Up Brokerage Sweep Rates, Raises FDIC Insurance Coverage.")
