Billions of dollars in institutional cash is exiting JPMorgan Chase in a search of higher yields, according to a new report.
New numbers show the amount of cash deposits at JPMorgan’s corporate and investment bank fell by $75 billion in the second quarter of 2023, reports the Financial Times.
That’s a loss of 10% from one year prior.
People and corporations with large amounts of cash have been shifting away from the banking giant and the traditional banking system at large to utilize digital banks and money market funds, which typically offer 4% or more on insured deposits.
Traditional banks are also witnessing a transition away from non-interest bearing accounts.
Bank of America says corporate clients now hold 60% of their cash in interest bearing accounts, representing a 30% jump from one year ago.
BofA says the expenses it’s paying on interest have surged twice as fast as the interest the bank itself is earning through loans and interest bearing assets.
Citigroup and State Street are also reporting increased “sensitivity” to the yield they are earning on deposits.
As for retail clients, JPMorgan says its mainstreet customers are sticking with the bank in greater numbers, with retail deposits falling by 2% in the second quarter of this year.
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