This is big: Under regulatory gun, J.P. Morgan to start charging fees for large corporate deposits

This is big: Under regulatory gun, J.P. Morgan to start charging fees for large corporate deposits

[Ed. – Federal regulations are causing this.  The result will be locking down huge amounts of wealth in forms other than ready cash.  That will affect the economy like concrete being poured slowly around your legs.  Emphasis added.]

J.P. Morgan Chase & Co. is preparing to charge large institutional customers for some deposits, citing new rules that make holding money for the clients too costly, according to a memo reviewed by The Wall Street Journal and people familiar with the plan.

The largest U.S. bank by assets is aiming to reduce the affected deposits by up to $100 billion by the end of 2015, according to a bank presentation Tuesday morning. …

The plan won’t affect the bank’s retail customers, but some corporate clients and especially an array of financial firms, including hedge funds, private-equity firms and foreign banks, will feel the impact, according to the memo. The bank is focusing on around $200 billion of certain “excess” deposits from financial institutions out of $390 billion of total financial institutions deposits, according to the presentation. …

The Wall Street Journal reported in early December that J.P. Morgan and several other banks, including Citigroup Inc., HSBC Holdings PLC, Deutsche Bank AG and Bank of America Corp. , had spoken privately with clients in recent months that new regulations are making some deposits less profitable, in some cases telling clients they would charge fees or work to find alternatives for some of the deposits. …

Since the financial crisis, new rules have been put into place that require banks to maintain enough high-quality assets that could be converted into cash during a crisis to cover a projected flight of deposits over 30 days. Because large, uninsured deposits would be expected to leave most quickly, the rules will now require that banks maintain reserves for those deposits that they cannot use for profitable activities like making loans. That makes it much less efficient or profitable for banks to hold these deposits.

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