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Bank deposits edge up after record outflows, Fed data show - Financial Markets Worldwide

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ECONOMY 3 hours ago (Apr 07, 2023 06 pm EST)


© Reuters. The exterior of the Marriner S. Eccles Federal Reserve Building is seen in Washington, DC, U.S., on June 14, 2022. REUTERS/Sarah Silbiger

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By Dan Burns

(Reuters) – U.S. commercial bank deposits showed signs of stabilizing for the first time in about a month toward the end of March, after the financial crisis that has rattled the banking system since the collapse of two of its largest Depositors are uneasy.

Deposits at all commercial banks fell on a non-seasonally adjusted basis in the week ended March 29 from a week earlier, Federal Reserve data showed on Friday. The revised $17.31 trillion rose to $17.35 trillion.

This is the first increase since early March and marks a temporary end to the record deposit flight sparked by the collapse of Silicon Valley banks, Bank deposits edge up after record outflows, Fed data shows Signature Library

(OTC:) near the middle of last month. The collapse of the second and third largest banks in U.S. history forced federal regulators to guarantee all deposits at the two institutions and prompted emergency action by the Federal Reserve to restore confidence in the banking system.

The asset-liability ratios of the 25 banks with the largest deposit assets and small and medium-sized banks all increased. Smaller banks have been hit especially hard by deposit outflows after back-to-back failures, with some depositors moving cash to larger institutions amid fears that any money above the federally insured limit of $250,000 per depositor could be at risk.

After more than a year of aggressive rate hikes by the Fed to slow growth and cool inflation, last month’s banking turmoil fueled fears that the central bank’s aggressive tightening could spark a recession worry. economic recession.

Economists and policymakers are closely watching the Federal Reserve’s weekly snapshot of the nation’s bank financials for signs that the deposit flight has come to an end. They are watching for signs that lenders may therefore begin to rein in credit, a move that could hasten the onset of a slowdown or make it worse.

It is true that overall credit from U.S. banks did fall by a record more than $120 billion in the latest week on a non-seasonally adjusted The result of the $87 billion divestiture of securities to non-banks such as hedge funds. The Fed said banks had sold such a large amount of assets in each of the last two weeks, most of it in the form of Treasuries and mortgage-backed securities.

The moves coincided with the recent sale of various assets of two failed banks at the direction of the FDIC, though the Fed did not specify whether this was the impetus for the divestiture.

But meanwhile, bank lending to businesses and consumers held steady as the end of the month approached, with loans outstanding at $12.07 trillion, up slightly from a week ago. While both commercial and residential real estate loans and commercial and industrial loans, the benchmark for business credit, both declined slightly, the decline was offset by a pick-up in consumer loans led by credit card balances.



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