Bank of America has mopped up more than $15 billion in new deposits in the past few days
Even as US-based Silicon Valley Bank (SVB) and Signature Bank have collapse with enormous speech, other US banks are gaining depositors as a result of this. According to a Bloomberg report, Bank of America (BofA) mopped up more than $15 billion in new deposits in the past few days.
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According to the report, the inflows offer a first glimpse into the deluge of deposits that made its way to the country’s largest banks as customers fearful of a spreading crisis sought refuge in the firms seen as too big to fail. According to Bloomberg, the money flowing into the second-largest US bank was described by people with direct knowledge of the matter who asked not to be identified.
Apart from BofA, other banks like JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. also gained billions in new deposits. Though the new deposit figures for them is not known yet.
The collapse of Silicon Valley Bank, also know as SVB, is being termed as the biggest bank failure since the crisis at Washington Mutual in 2008 or the global financial crisis. This was the 16th biggest lender in the US and was the go-to bank for several startups across the world.
The bank failed after clients — many of them venture capital firms and VC-backed companies that the bank had cultivated over time — began pulling out their deposits, creating a run on the bank. The SVB collapse led investors to speculate that the Fed would now hesitate to hike interest rates by a super-sized 50 basis points this month.
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SVB’s regulatory filing last week showed that it has a negative cash balance of $958 million. SVB’s shares plunge 41 per cent, its biggest slump since 1998. “Despite the bank being in sound financial condition prior to March 9th, investors and depositors reacted by withdrawing $42 billion of deposits, causing a run on the bank,” said the filing.
SVB, as Silicon Valley Bank is known, had a massive share of its assets – 55 per cent– invested in fixed-income securities, such as U.S. government bonds.
