Deposit outflows after SVB collapse concentrated among ‘super-regionals’

Bank deposit withdrawals following the collapse of Silicon Valley Bank were concentrated in around 30 “super-regional” institutions in the $50 billion to $250 billion range, similar to SVB, New York Fed researchers concluded in a newly released study.

Deposits among thousands of “community and smaller regional banks… were relatively stable by comparison” during March, the researchers found, with the largest, systematically important firms receiving the deposits that left the super-regional group.

Though there were concerns about a broader run on bank deposits after the failure of SVB on March 10 and Signature Bank on March 12, the NY Fed study points to what Fed officials themselves seemed to conclude early on — that the problems were focused in a discrete set of institutions.

There were fears banking sector weakness might touch off a wave of mergers that would wipe out smaller institutions – to the potential detriment, for example, of small business lending.

But even banks up to $100 billion in size “were relatively unaffected,” with the smallest institutions seeing virtually no change in deposits after the events of mid-March. Smaller firms tend to have higher levels of their deposits insured by the Federal Deposit Insurance Corp. The high level of uninsured deposits at SVB was a factor in its collapse.

This report’s information was first seen on REUTERS; to read more, click this link.