WHAT!? You Want to Hold Cash!? There Will Be a Fee for That...
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Bank of New York Mellon Corp (NYSE: BK) is looking to bank on the increased cash deposit the company has witnessed in recent weeks due to the global market turmoil.
According to the Wall Street Journal, the bank told its biggest clients it will charge a fee starting next week for those account holders who have significantly raised their deposit balances over the past month.
Bank of New York said it will charge 0.13%, plus an additional fee if the one-month Treasury yield dips below zero on depositors that have accounts with an average monthly balance of $50 million "per client relationship."
The bank cited the cost incurred from the sudden and significant increase in deposits it has seen.
The move has already had widespread market implications, according to the Journal:
Bank of New York's decision sent money-market mutual funds and financial institutions scrambling to put their cash to work in short-term markets Thursday, sending rates falling across many investments. Treasury bill prices rose, pushing down their yields down sharply, and interest rates on overnight securities repurchase, or repo, agreements tumbled.
The cost of borrowing overnight in this market tumbled below zero Thursday, after starting the day at around 0.08%.
The calculus for determining what you would hold lieu of cash has changed because of this chart," said Alan De Rose, managing director in government trading at Oppenheimer & Co"
Shares of Bank of New York Mellon are down 2.4 percent Thursday afternoon.
According to the Wall Street Journal, the bank told its biggest clients it will charge a fee starting next week for those account holders who have significantly raised their deposit balances over the past month.
Bank of New York said it will charge 0.13%, plus an additional fee if the one-month Treasury yield dips below zero on depositors that have accounts with an average monthly balance of $50 million "per client relationship."
The bank cited the cost incurred from the sudden and significant increase in deposits it has seen.
The move has already had widespread market implications, according to the Journal:
Bank of New York's decision sent money-market mutual funds and financial institutions scrambling to put their cash to work in short-term markets Thursday, sending rates falling across many investments. Treasury bill prices rose, pushing down their yields down sharply, and interest rates on overnight securities repurchase, or repo, agreements tumbled.
The cost of borrowing overnight in this market tumbled below zero Thursday, after starting the day at around 0.08%.
The calculus for determining what you would hold lieu of cash has changed because of this chart," said Alan De Rose, managing director in government trading at Oppenheimer & Co"
Shares of Bank of New York Mellon are down 2.4 percent Thursday afternoon.
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