(Reuters) – Deposits at small U.S. banks fall by record after Silicon Valley Bank collapse in March 10, Fed week Five published data show.
Deposits at small banks fell by 119 $5 billion to $5. 46 trillion in the week ending March 10. This was more than double the previous record drop and the largest drop as a percentage of total deposits since the week ended March 16, 2007.
Increased borrowing by small banks, defined as the largest 10 commercial banks in the U.S. Weekly data from the Federal Reserve showed a rise from 119 billion to a record 253.6 billion.
“So the small banks had 74 $$74 more cash on hand this weekend, suggesting some of that borrowing was to build up a war chest , as a precaution in case depositors demand redemption of their money,” wrote Capital Economics analyst Paul Ashworth.
SVB collapsed after being unable to handle a swift and massive run on depositors who withdrew tens of billions of dollars within hours.
Mass Deposits Bank of America up $46 billion to in a week Dollar. 46 Trillion dollars, Fed data showed.
U.S. bank deposits overall have been falling 2021 and early 2021 after rising sharply in the wake of the pandemic aid.
The trend reversal for the big banks is notable. The increase was about half as large as the drop in deposits at small banks, suggesting some cash may have flowed into money market funds or other vehicles.
Big banks also increased borrowing this week, by $119 billion.
It is unclear whether the transfer of deposits from smaller banks will continue.
“Deposit flows in the banking system have stabilized last week,” Federal Reserve Chairman Jerome Powell said on Wednesday.