Investors are well aware that money markets pay next to nothing in interest these days. Now one bank has announced a policy to actually charge clients a fee to hold their cash.
The policy by Bank of New York Mellon Corp. will apply to some large depositors to hold their cash, reports the Wall Street Journal.
In a letter reviewed by WSJ, Mellon advised that 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."
"In the past month, we have seen a growing level of deposits on our balance sheet from clients seeking a safe-haven in light of the global interest rate and credit environment," the bank told the Journal in an emailed statement.
"We have notified certain clients with extraordinarily high deposit levels that we will begin implementing a 13 basis point fee on the excess deposits. Clients who maintain routine deposit levels will not be affected."
Experts told the Journal the policy appears to be a response to heavy influxes of cash from money-market funds, corporate treasurers and investment houses.