Banks are discovering that holding cash can be lucrative again, Gareth Jones

Wall Street giants and scrappy start-ups alike this week have reported substantial jumps in net interest for the quarter that ended on September 30. Slow moving custodian Bank of New York Mellon was among the biggest winners, with a 44 per cent increase year on year. Now that holding cash can be lucrative again, of course more financial institutions want it. But competition is rising.

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Now the worm has turned. Apple and Goldman Sachs are teaming up on a no-fee high-yield savings account. Some UK banks are offering regular clients special savings accounts that pay as much as 5 per cent. UBS has finally scrapped its cash balance fees, and institutional cash managers are telling me that they are actively plying corporate treasurers with other services to make their offerings more attractive. Even though retail deposits tend to be sticky, customers read the headlines and they are starting to go in search of better deals. US retail money market funds have seen assets rise 10 per cent since the start of June to $1.55tn, although some of that is coming out of choppy equity markets, according to the Investment Company Institute.

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