U.S. sees deposits stabilizing as some regional banks reel
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[March 20, 2023] By
David Lawder, David French and Lananh Nguyen
WASHINGTON/NEW YORK (Reuters) - A U.S. official said on Sunday that the
deposit outflows that left many regional banks reeling in the wake of
Silicon Valley Bank's failure had slowed and in some cases reversed, as
investors tried to ascertain whether the crisis was contained.
Shares of regional banks such as First Republic Bank, PacWest Bancorp
and Western Alliance Bancorp have plunged since the banking crisis
started on March 8 with the collapse of Silvergate Capital Corp and
intensified as U.S. regulators took over Silicon Valley Bank and
Signature Bank .
A U.S. official, speaking on condition of anonymity, told Reuters that
deposits in the country's banking system were stabilizing and that U.S.
banks had limited exposure to Credit Suisse Group AG, the Swiss lender
that teetered before larger peer UBS Group AG agreed to acquire it on
Many of the regional banks have also said that their deposit base has
stabilized. However, some of them, including First Republic and PacWest,
have been seeking to raise capital privately but have been unsuccessful
thus far, amid concerns from peers and private equity firms about
potential losses in their investment portfolios and loan books, sources
have told Reuters.
"The regional banks have come under pressure because they are less
equipped to handle a withdrawal of deposits the way the big banks are,"
said Mark Chandler, chief market strategist at Bannockburn Global Forex
in New York.
In a move of solidarity, most of the major banks agreed on Thursday to
deposit $30 billion in First Republic. Yet in a blow to the bank's
financial outlook on Sunday, S&P Global downgraded First Republic's
credit rating deeper into junk territory, and warned that another
downgrade was possible, citing the impact of deposit outflows.
Sources said on Sunday that First Republic was still trying to put
together a capital raise but that no deal was imminent.
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A person walks past a First Republic
Bank branch in Midtown Manhattan in New York City, New York, U.S.,
March 13, 2023. REUTERS/Mike Segar
First Republic said in a statement it was "well positioned to manage
short-term deposit activity."
At least four U.S. lawmakers said on Sunday they would consider
whether a higher federal insurance limit on bank deposits than the
current $250,000 threshold was needed to inspire more confidence in
Billionaire investor Warren Buffett, who helped rescue some banks
during the 2008 financial crisis, has held discussions with senior
U.S. officials about the banking crisis, a source said on Saturday.
Buffett has yet to prop up any of the regional banks.
The Federal Deposit Insurance Corporation (FDIC), the U.S. regulator
that took over Silicon Valley Bank and Signature Bank, made some
progress on Sunday in returning one of them to the private sector.
It said New York Community Bancorp would purchase deposits, loans
and 40 branches from Signature Bank. New York Community will
purchase $12.9 billion of loans at a discount of $2.7 billion. The
FDIC estimated the deal would cost its Deposit Insurance Fund
approximately $2.5 billion, highlighting the government backstop
that was needed to clinch the deal.
The FDIC failed, however, in its effort to find a buyer for the
entirety of Silicon Valley Bank this weekend and will now seek new
bids for parts of the bank on Wednesday and Friday, sources told
(Reporting by David Lawder in Wahington, D.C. and David French and
Lananh Nguyen in New York; Writing by Greg Roumeliotis; editing by
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