Morgan Stanley Offers Savers Top CD Rate to Bring in Cash

  • 11-month CD yields 1.9% for buy-ins from $10,000 to $2 million
  • ‘Extremely compelling rate’ could fuel new loans, analyst says

To feed its clients’ insatiable desire for loans, Morgan Stanley is hoping to gather fresh cash by offering savers the country’s top rate for certificates of deposit.

An 11-month CD with a 1.9 percent annual percentage yield is available from Friday through Sept. 18, according to a term sheet whose contents were confirmed by Morgan Stanley spokeswoman Christy Jockle. The New York-based bank set a minimum purchase of $10,000 and a $2 million maximum. Those without an existing brokerage account would need to open one.

“That’s an extremely compelling rate for a CD,” said Greg McBride, chief financial analyst at Bankrate.com. He said that the top nationally available rate on a 1-year CD is 1.56 percent. “Deposits are the fuel that powers the lending machine, so they must need this for new loans.”

Wall Street brokerages have turned their wealthy clients into borrowers to drive revenue growth. At Morgan Stanley, loans backed by holdings of stocks and bonds surged 25 percent to $39.4 billion in the second quarter. Residential mortgages also increased, rising 13 percent to $25.7 billion. The securities-backed products give clients liquidity, but borrowers can be squeezed if investment values drop in a market correction and banks demand repayment.

In a bid to attract more deposits to fuel its lending, the firm rolled out updated banking products last year, including online and mobile services. Its goal, announced in late 2015, was to raise deposits to $200 billion within several years. As of June, the bank had $139 billion in deposits, 7.3 percent less than a year earlier.

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