Closing of SVB Bank causes fall in deposits in small US banks

Robert Besser
27 Mar 2023, 14:03 GMT+10

Deposits at small U.S. banks throughout the country dropped the most since 2007 after the March 10 closing of Silicon Valley Bank, according to figures released by the US Federal Reserve Bank.
For the week ending March 15, deposits at small banks fell $119 billion to $5.46 trillion.
SVB collapsed after it was unable to meet a massive run by depositors who took out tens of billions of dollars in only a few hours.

NEW YORK CITY, New York: Deposits at small U.S. banks throughout the country dropped the most since 2007 after the March 10 closing of Silicon Valley Bank, according to figures released by the US Federal Reserve Bank.

For the week ending March 15, deposits at small banks fell $119 billion to $5.46 trillion. Officials said there has not been such a large decline in deposits at small banks since the week ending March 16, 2007.

However, lending at small banks increased this week by $253 billion to a record $669.6 billion, according to the Federal Reserve Bank.

"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 massive run by depositors who took out tens of billions of dollars in only a few hours.

Officials have noted that since early 2021, U.S. bank deposits have been in decline, after sharply rising in the wake of pandemic aid. It is believed that much private money has gone into money market funds or other instruments.

Officials also said they did not know whether the shift in deposits out of small banks would continue.

"Deposit flows in the banking system have stabilized over the last week," Fed Chair Jerome Powell said this week.

Watch latest videos

News RELEASES

Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Peking Press.

More Information

22 ℃

Fair in Beijing/Capital

Business

Section

US hotel projects to stall as developers unable to receive loans

NEW YORK CITY, New York: Due to tighter lending standards from regional banks, US hotel developers are finding it more ...

Concern over engine fires causes 142,000 Ford SUV, truck recalls

DETROIT, MICHIGAN: Ford has announced that due to an engine defect that could cause fires, it will expand and issue ...

Modest gains for American stock markets Friday, U.S. dollar loses steam

NEW YORK, New York - The bulls had the upper hand again on Friday, pushing the major indices to new ...

Subsidies make Tesla Model 3 less expensive than Toyota Camry

LOS ANGELES, California: After adjusting its battery supply chain to qualify for federal credits and other tax breaks, Tesla's Model ...

Apple sets record as valuation nears $3 trillion

NEW YORK CITY, New York: Before the start of its annual Worldwide Developers Conference this week, Apple shares hit a ...

Brain implant company Neuralink valued at $5 billion

FREMONT, California: Elon Musk's brain implant startup Neuralink, valued at some $2 billion during a private fundraising round two years ...

China

Section