2nd UPDATE:State Street,Northern Trust Haven't Changed Deposit Pricing

State Street Corp. (STT) and Northern Trust Corp. (NTRS), two large trust banks, haven't changed their pricing on customer deposits, representatives for the two companies said Thursday.

The statements follows news that rival custodian Bank of New York Mellon Corp. (BK) told customers it would start charging for increases in some deposits over $50 million, a sharp move as banks see deposits pile in.

The representatives from State Street and Northern Trust declined to comment further on any customer pricing decisions.

Wells Fargo & Co. (WFC), the nation's second-biggest deposit holder after Bank of America Corp. (BAC), doesn't charge corporations to hold deposits, a spokeswoman said, and added the bank has "no plans to charge our customers for increasing their deposit balances." Some retail consumers are charged a fee to maintain an account, but not specifically for deposits. Wells Fargo, like most retail banks, pays interest on many consumer deposits.

A spokesman for U.S. Bancorp (USB), which has a smaller custodial operation than Bank of New York Mellon or State Street, also said the bank hasn't changed its policy.

A spokeswoman for Citigroup Inc. (C), meanwhile, said, "While it is not our policy to discuss client pricing, deposits are priced in line with market rates." However, unlike Bank of New York Mellon, Citi won't charge "negative interest rates," as the charge on deposits in effects creates, a person familiar with the matter said.

Citi is a major competitor of Bank of New York Mellon in the custody business, and moves trillions of dollars around the world for global businesses and the U.S. government. Some of that money stays temporarily as deposits at the bank.

A spokesman for Bank of New York Mellon said only "a small number of clients with extraordinarily high deposit levels where the deposits have increased significantly in recent weeks" will be affected by the pricing change.

A representative from J.P. Morgan Chase & Co. (JPM), which is a large custodian, wasn't immediately able to comment.

Bank of America, which also has a custody business, declined to comment Thursday.

Deposits at State Street, which as a custodian deals with large corporate clients and other banks as customers, soared during its second quarter. Deposits as of the end of June were up $18 billion, or 17%, from the end of March, and up more than $27 billion year-to-date. Bank of New York Mellon said it's incurring costs such as deposit insurance on the surge of deposits, but is having difficulty investing the money to earn a return.

With markets in turmoil, and U.S. Treasurys yielding slim amounts, large cash holders have been parking their cash in banks. BNY Mellon said clients have been seeking a safe-harbor and it was notifying customers with "extraordinarily high" deposits it could charge 0.13% on deposits.

Banks, meanwhile, have little opportunity to put money from clients to work. Loan demand from businesses is improving slightly, but remains weak overall, and securities are considered risky. As of June 30, deposits at domestic commercial banks rose 5.1% from a year earlier, to $7.1 trillion, while loans fell 2.2%, to $6.1 trillion, according to data provided by the Federal Reserve.

J.P. Morgan parked $170 billion in deposits at central banks at the end of June. The amount was four times the amount a year earlier, and is considerably more than all the deposits held by SunTrust Banks Inc. (STI), which, with about $120 billion in deposits, is the seventh-largest U.S. bank by that measure.

-By David Benoit and Matthias Rieker, Dow Jones Newswires; 212-416-2458; david.benoit@dowjones.com

--Robin Sidel and Marshall Eckblad contributed to this article.

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