Reuters: US Dollar Report: UPDATE 1-BNY Mellon weighs charging clients on euro deposits

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UPDATE 1-BNY Mellon weighs charging clients on euro deposits Jul 18th 2012, 14:42 Wed Jul 18, 2012 10:42am EDT July 18 (Reuters) - BNY Mellon Corp, the world's largest custody bank, is weighing whether to charge clients on their euro deposits, senior executives said on Wednesday. The bank is concerned there could be a prolonged build-up in client deposits as corporations and other institutional investors, rattled by problems in the euro zone, park their cash. BNY Mellon Chief Financial Officer Todd Gibbons told Reuters it was possible the bank would impose some kind of charge. No decision has been made, he said. In the second quarter, noninterest-bearing client deposits at the bank surged by $20 billion, or 46 percent, to $63 billion. An influx of those types of deposits can raise the bank's costs. Meanwhile, earning money on the deposits has become increasingly difficult in an ultra-low interest rate environment. Last year, BNY Mellon said it would impose a charge on excess client deposits, but it didn't take action because clients changed their habits. Gibbons said the bank's move then was in response to the U.S. debt-ceiling crisis, which was resolved. This time, though, BNY Mellon is worried about a prolonged period of euro deposits accumulating. The European Central Bank cut its main interest rate on July 5 to a record low of 0.75 percent and reduced the deposit rate it pays banks for parking money with it overnight to zero in an effort to breathe life into the flagging euro zone economy. "What we're worried about is if markets entrench further, we could see an increase in our deposit levels," Gibbons said. "It's very difficult to put that money to work." Link this Share this Digg this Email Reprints

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