JP Morgan, one of the world’s largest custodians, will reportedly begin charging private equity firms and other large institutional clients new fees on deposits.
Citing new banking regulations that make the deposits less profitable to handle, the bank will ask clients to pay the new fees or move the funds to an alternative JP Morgan product such as a money-fund sweep account, according to a JP Morgan memo reviewed by The Wall Street Journal.
All together the bank wants to reduce the affected deposits by up to $100 billion by end of year, the WSJ said, citing a JP Morgan presentation made Tuesday morning.
It isn’t clear what the new fee rates will be, but specifics are expected Tuesday at the bank’s annual strategy outlook with investors. However, the new fees will likely vary by client, and take into consideration the client’s overall relationship with the bank and the size of the account, the WSJ said.
“Several new rules and measurements require higher capital positions for the largest, most systemically important US bank holding companies, including JPMorgan,” Bloomberg reported, citing the same memo. “Institutional deposits in excess of the amount needed for operating purposes are viewed as temporary funding, and as a result cannot be fully deployed for traditional lending.”
A US spokesperson for JP Morgan did not immediately return a request for comment.