Two high-profile bank failures and the subsequent angst about a potential liquidity crisis have prompted a deposit migration that could be one of the largest shifts of money in recent memory.
Industry experts say it would make sense for the biggest U.S. banks — including those that are considered "too big to fail" and thus are thought of as safe havens for customers — to be the beneficiaries of many of those on-the-move deposits. Some regional and community banks as well as
But just days after bank runs led to the collapse of
"Bankers are kind of looking at this as manna from heaven," said Neil Stanley, CEO of The CorePoint, a consulting firm in Nebraska. "The question is, how long does the manna last?"
The largest U.S. banks are seeing an influx of deposits and interest from potential new clients, according to media reports Tuesday from
JPMorgan Chase, the largest U.S. bank by assets, declined to comment, as did Citigroup, Wells Fargo and Truist Financial, which is one of the largest regional banks in the country. Neither Bank of America nor PNC Financial Services Group responded to requests for information.
U.S. Bancorp in Minneapolis has seen an uptick in deposits since California-based Silicon Valley was shut down on March 10 as well as heightened interest from individuals and companies looking to open new accounts, a spokesperson for the company said Tuesday in an email.
U.S. Bancorp in particular could be in line to rake in plenty of deposits in the aftermath of Silicon Valley's failure. In December, the $675 billion-asset company acquired MUFG Union Bank in an $8 billion deal that significantly
Citizens Financial Group in Providence, Rhode Island, issued a press release Monday saying that it "has seen higher than normal interest from prospective new customers over the past few days," but on Tuesday the company declined to provide more details about deposit intakes.
Smaller banks say they too are positioned to benefit from the wreckage of Silicon Valley Bank and Signature. Steve Miller, CEO of FFB Bank — which just changed its name from Fresno First Bank — believes it may be possible to acquire new clients and possibly some bankers.
"Our team is seeing an opportunity to gain new customers and talent," Miller said Tuesday.
While there isn't official data yet on how deposits are moving, the shift is underway, according to anecdotal information.
There has been "a lot of churn over the last couple of days," according to Peter Serene, director of commercial banking at Curinos, a financial services consulting firm. Among regional banks specifically, it's been "a mix of inflows and outflows," he added.
Over the past few days, Atomic, a San Francisco-based company that provides investment management software to banks and other financial services firms, has helped hundreds of companies affected by the failures of Silicon Valley Bank and Signature open new bank accounts, with most seeking out money center banks as safe harbors, CEO David Dindi said.
"There is a flight to quality, to banks that are of systematic importance at this point in time," Dindi said. "We expect it to continue this week."
Banks receiving new deposits – from former Silicon Valley Bank and Signature customers as well as clients who are worried about the safety and soundness of other regional banks – may welcome them with open arms. That's because banks, which were flush with deposits during the first two years of the pandemic, started to see some of those deposits flow out last year as the Federal Reserve began raising interest rates and
In an attempt to attract and retain deposits, some banks have started paying more for deposits, including a few big banks that have
It makes sense, given the fear that gripped the market in recent days, that customers would take their money and flee to other banks they thought were safer, said Stanley, whose consulting firm helps banks price and sell savings deposits. When the dust settles, those customers will have more time to consider their long-term options in terms of where to park their money, he predicted.
"They will say, 'I wonder what I should really do? Should I move more [money] in or move more out?'" Stanley said. "There will be waves of decision-making that will be less emotional."
Banks' first-quarter earnings calls, which begin in four weeks, should provide more clarity around the deposit picture as banks disclose information such as quarter-over-quarter deposit totals.
Community banks like FFB probably won't gain any big venture capital accounts like the ones that were held at Silicon Valley, but they could conceivably pick up smaller depositors, according to Chris Marinac, an analyst at Janney Scott Montgomery.
"That business could easily go to any other bank. It isn't far-fetched at all," Marinac said.
In a research note Tuesday evening, S&P Global Ratings said it "has not seen evidence that the unmanageable deposit outflows experienced at a few banks have widely spread across" the banks that S&P rates.
"We believe the emergency measures the Federal Reserve announced on March 12 have equipped banks with additional liquidity sources if needed and probably also lowered the odds that confidence-sensitivity issues become relevant for a large number of banks," S&P said.
Marinac expressed skepticism about some of the reports saying deposits were mostly moving to big banks, but he did acknowledge that "there are definitely outflows, no doubt about it."
"It's just a question of how bad [the outflows] really are," he said.
Polo Rocha contributed to this story.
