WSJ (Again) on Banks Raising Rates
WSJ.com writes about rising bank rates again in "A Surprising Shakeout Among Banks as Rates Rise." Subtitled, "Ordinary giants like Bank of America are slower to raise deposit rates, but this time is different," the article explains, "When the Federal Reserve began raising interest rates, every bank was a winner. As the Fed prepares for its fifth rate boost, some banks are benefiting more than others. When rates start to rise, banks are typically in no rush to raise their deposit rates. After several increases, banks have to pay out more to depositors or risk seeing them leave in search of higher yields. We have hit that point now, but it is playing out in a surprising way, according to analysts at Keefe, Bruyette & Woods. So far this year, the average cost of interest-bearing deposits at big banks like Bank of America and J.P. Morgan Chase has gone up by 0.18 percentage point, compared with a 0.10 increase at large regional lenders like SunTrust Banks, KBW calculates.... Ordinarily giants like Bank of America are slower to raise rates, thanks to their strong brand and market positions. The difference this time is these banks have been pushing to serve wealthier clients who are more likely to move money around in search of higher yields.... Bank-deposit costs may get more in sync as rates keep going higher, but for now investors need to focus on the differences." (See also, our Oct. 25 Link of the Day, "Banks Pay Up on Deposits Says WSJ.")
