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Raymond Pasillas
Mar 27, 2023 5:09AM ET
Buy gold & silver.
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Small U.S. banks see record drop in deposits after SVB collapse
Published Mar 24, 2023 04:33PM ET
Updated Mar 24, 2023 06:30PM ET
© Reuters. FILE PHOTO: A Silicon Valley Bank employee holds the door for a customer at the bank's branch office in downtown San Francisco, California, U.S., March 13, 2023. REUTERS/Kori Suzuki
(Reuters) -Deposits at small U.S. banks dropped by a record amount following the collapse of Silicon Valley Bank on March 10, data released on Friday by the Federal Reserve showed.
Deposits at small banks fell $119 billion to $5.46 trillion in the week ended March 15. That was more than twice the previous record drop and the biggest decline as a percent of overall deposits since the week ended March 16, 2007.
Borrowings at small banks, defined as all but the biggest 25 commercial U.S. banks, increased by $253 billion to a record $669.6 billion, the Fed's weekly data showed.
"As a result, small banks had $97 billion more in cash on hand at the end of the week, suggesting that some of the borrowing was to build war chests as a precautionary measure in case depositors asked to redeem their money," Capital Economics' analyst Paul Ashworth wrote.
SVB collapsed after it was unable to meet a swift and massive run by depositors who took out tens of billions of dollars in a matter of hours.
Deposits at large U.S. banks rose $67 billion in the week to $10.74 trillion, the Fed data showed.
Overall U.S. bank deposits have been in decline after sharply rising in the wake of pandemic aid in 2020 and early 2021.
The reversal in the trend for large banks was notable. The rise equates to about half as much as the deposit decline at small banks, suggesting that some of the cash may have gone into money market funds or other instruments.
Large banks also increased borrowings in the week, by $251 billion.
It was unclear if the shift in deposits out of small banks will persist.
"Deposit flows in the banking system have stabilized over the last week," Fed Chair Jerome Powell said on Wednesday.
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Comments (5)
up ok
Mar 26, 2023 5:03PM ET
all that go to big banks and big banks stocks are down for lending concerns. eventually if not in a short time these issues will go away. keep buying big Bank dips
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B L
Mar 24, 2023 7:27PM ET
The hard truth is the Smaller the Bank, the Higher the Risk.AND It costs NOTHING to Remove that Risk by moving you cash to the larger banks.Ask yourself this: who has more political clout when it comes to a government bailoutSmallville Cooperative Savings Bank?orBank ofAmerica?
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James King
Mar 24, 2023 7:27PM ET
Recent data showed even large banks have lost over $500 billion deposits in one week only. Yellen, FED and Biden has no clue what to, but keep lie to calm down the public. It does not work at all in todays rich information time. Another financial crisis and market crash is imminent.
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Waldemar Gau
Mar 24, 2023 7:17PM ET
svb was a crime and Most in the government paid by Citadel from kenny
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James King
Mar 24, 2023 4:49PM ET
It means small to medium banks will have more trouble and are getting closer to bankruptcy. Eventually it will hit large banks and the whole economy, No one in this world trust US treasure and FED anymore. Money is racing to flow out from EU and US banks as well as the US debt.
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