JPMorgan Chase & Co. plans to charge institutional clients such as hedge funds for certain deposits as tougher regulations require banks to hold more capital against some funds, according to a memo.

The world’s largest investment bank plans to reduce its non-operating deposits, or extra cash held in client accounts, which have become a “costly and inefficient use of our balance sheet,” JPMorgan said in a memo seen by Bloomberg News and confirmed by a spokesman in London. The bank will encourage other products, while likely charging for some deposits and asking some clients to hold their money at a different firm.

“Several new rules and measurements require higher capital positions for the largest, most systemically important U.S. bank holding companies, including JPMorgan,” the bank said. “Institutional deposits in excess of the amount needed for operating purposes are viewed as temporary funding, and as a result cannot be fully deployed for traditional lending.”

Stiffer capital requirements and increased operating expenses have prompted banks around the world to look for ways to shore up earnings. In a push to make the financial system safer, the Federal Reserve has proposed a plan that may require JPMorgan to add more than $20 billion in capital by 2019.

The Wall Street Journal reported the memo earlier.