Major banks experience surge in deposits after Silicon Valley Bank crash
Matt Egan, CNN
Nervous bank customers rushed to the safety of the big banks after two high-profile bank failures eroded confidence in the system.
Bank of America, Wells Fargo and Citigroup experienced significant growth in deposits after Silicon Valley Bank ran into trouble last week, people familiar with the matter told CNN.
Smaller and regional banks have been hit by deposit outflows, although a senior Treasury official told CNN earlier this week that customer withdrawals have declined.
The situation is unstable and it is not clear how much money has been invested in the big banks, although the amount is likely to be in the billions or tens of billions of dollars.
Last Thursday alone, customers pulled $42 billion out of Silicon Valley Bank, depriving the California lender of all its cash. By Friday, regulators closed the bank, making it the second-biggest bankrupt in American history.
Last week, Citi accelerated account openings in retail banking, small business lending and asset management, a person familiar with the matter said.
Bank of America raised more than $15 billion in new deposits in just a few days, Bloomberg News reports.
Banks usually do not disclose details of short-term fluctuations in deposits, preferring to publish these figures on a quarterly basis.
Bank of America, Wells Fargo and Citi declined to comment.
Large banks are considered safer due to their large balance sheets. Moreover, their role as systemically important institutions means that the government will come to their aid in case of problems, as was the case in 2008.
But the FDIC insures deposits of up to $250,000 in each bank per borrower, whether the accounts are in small, medium, or large banks.
Analysts say the FDIC’s decision to bail out uninsured depositors at Silicon Valley Bank and Signature Bank suggests that regulators will be forced to do the same if another bank fails.
The-CNN-Wire
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