Banks to Companies: No More Deposits, Please:
U.S. companies are holding on to billions of dollars in cash. Their banks aren’t sure what to do with it.
When the coronavirus pandemic hit last year, corporate executives rushed to raise money. Banks have been holding that cash ever since, and because companies are reluctant to borrow from them, they can’t turn it into income-generating loans. That has weighed on banks’ profit margins, and some have started pushing corporate customers to spend the cash on their businesses or move it elsewhere.
Bankers say they thought the improving economy would reduce companies’ desire for holding cash, but deposit inflows have continued in recent weeks. Chief financial officers and treasurers, many still wary of the pandemic’s impact, say they aren’t ready for big changes, even if they earn little or nothing on their deposits.
[...] Top of mind for many big banks is a rule requiring them to hold capital equivalent to at least 3% of all assets. Worried about the rule’s impact during the pandemic, the Fed changed the calculation in 2020 to ignore deposits the banks held at the central bank, but ended that break this March. Since then, some banks have warned the growing deposits could force them to raise more capital, or say no to deposits.
(Score: 0) by Anonymous Coward on Wednesday June 16 2021, @08:08PM (1 child)
Another roynd of khallow's tit for tat stupidity. Does anyone actually read his walls of text anymore?
(Score: 2) by Mykl on Wednesday June 16 2021, @10:22PM
I appreciate the fact that he responded to my questions: +1 Interesting. I don't agree with most of his post, but I can appreciate that he has an opinion on it. We are definitely aligned on Infrastructure spending - way too little spend on maintaining existing stuff.