Report: Big Banks’ Deposit Surge Following SVB Collapse Has Slowed
A wave of deposits into big banks following the regional banking crisis has reportedly slowed.
After Silicon Valley Bank (SVB) failed earlier this month, unease among customers led to a surge in outflows from other smaller lenders into banking giants like Citigroup, Bank of America and J.P. Morgan Chase.
However, the situation began to turn around March 16, CNBC reported this weekend, citing unnamed sources.
“The people who panicked got out right away,” one of the sources told CNBC. “If you haven’t made up your mind by now, you are probably staying where you are.”
March 16 was the same date at 11 U.S. banking giants teamed up to deposit $30 billion into struggling regional lender First Republic in a show of confidence in that bank and in the banking system at large.
“Together, we are deploying our financial strength and liquidity into the larger system, where it is needed most,” the group said at the time. “Smaller- and medium-sized banks support their local customers and businesses, create millions of jobs and help uplift communities.”
It’s not just big banks that saw deposits increase as the crisis unfolded. U.K. embedded finance firm ClearBank recorded a 20% increase in deposits the week that SVB collapsed.
“We’ve had a lot of inflow that’s driven that surplus cash in terms of flight to quality,” Charles McManus said Monday (March 27).
And earlier this month, brokerage firm Charles Schwab announced that its customers had deposited $16.5 billion in the days following the SVB collapse and the subsequent failure of Signature Bank two days later.
Both banks have since found new owners. Last week, the Federal Deposit Insurance Corporation (FDIC) said that Signature Bank had been sold to Flagstar Bank, a subsidiary of New York Community Bancorp.
One week later, the FDIC sold the bulk of SVB’s operations to First Citizens Bank, a North Carolina lender with a history of buying failed banks.
The news comes ahead of what PYMNTS has called “red letter day” for banking, with the House Financial Services Committee set to begin hearings Tuesday (March 28) on the state of the industry following the SVB/Signature failures.
“At the center of the discussion will … be what went wrong at Silicon Valley Bank and Signature Bank, and whether the steps taken by regulators amid bank runs and bank failures were the right ones,” PYMNTS wrote.