JPMorgan Chase loses $75,000,000,000 in institutional deposits due to customers’ demands for higher yields

According to a recent study, billions of dollars in institutional funds are being moved out of JPMorgan Chase in favour of other financial institutions that provide greater payouts.

According to new data cited by the Financial Times, cash deposits at JPMorgan’s corporate and investment bank dropped by $75 billion in the second quarter of 2023.

Large enterprises and individuals with substantial cash reserves have been moving away from the banking behemoth and the conventional banking system in general in favour of digital banks and money market funds, which normally give returns of 4% or more on insured deposits.

There has been a shift away from non-interest-bearing deposits at conventional banks as well. The percentage of corporate customers’ cash held in interest-bearing accounts at Bank of America has increased to 60% from 50% a year earlier.

According to BofA, the interest it spends has increased at a rate two times as fast as the interest it earns on loans and other income-generating assets.

Both Citigroup and State Street have noted a heightened “sensitivity” to the yield on deposits. JPMorgan reports an increase in loyalty from its mainstreet client, as seen by a 2% drop in retail deposits in the second quarter of this year.

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