BNY Mellon is starting to charge customers whose balance exceedsan average of $50 million a month, the bank confirmed. It will putin place a fee of 13 basis points on the excess balances, and couldincrease that fee if Treasury bill rates go negative.

“In the past month, we have seen a growing level of deposits onour balance sheet from clients seeking a safe-haven in light of theglobal interest rate and credit environment,” the bank said in astatement. It noted that “Clients who maintain routine depositlevels will not be affected.”

The new fees were predicted in an analysis released last week byconsultancy Treasury Strategies and reported today by the WallStreet Journal.

Anthony Carfang, a partner at Treasury Strategies, says BNYMellon's fee reflects the distortions caused by the unlimitedFederal Deposit Insurance Corp. coverage available on bank depositsthrough the end of 2012, and the relatively low premiums the FDICis charging.

Carfang compares FDIC premiums to the cost of buying a creditdefault swap on U.S. Treasury bonds, which traded around 60 basispoints last week. “The cost of insuring a U.S. Treasury bond forone year was 60 basis points, yet the cost of the FDIC guaranteeinga deposit, which is basically the same thing, is only 10 basispoints,” he says. “So naturally you would have a huge flow of fundsout of the market and into the banking system.”

In its statement, BNY Mellon argued that the fee will eventuallybecome unnecessary: “As markets stabilize, we expect deposit levelswill trend lower as they are redeployed into the markets.”

But Carfang says that for now, many uncertainties remain.Although the debt-limit legislation has been passed, it's only atemporary fix, and treasurers still face the possibility of a U.S.downgrade and the growing debt crisis in Europe.

“We know $100 billion moved out of money market mutual fundslast week, probably all into bank deposits,” he says, adding thatthe news of BNY Mellon's move could encourage more companies tomove assets into bank deposits.

“I think the fact that BNY Mellon has gone public with theirnegative interest rate—they call it a fee—will cause more money toflow into the banking system,” Carfang says. “Folks are going tolook at this and say, 'Wow, something doesn't smell good. Shouldn'twe have our money there too?'”