The financial situation in the United States looks to be getting worse, and as a result, the nation's top banks saw a huge increase in the number of customers withdrawing their money last week. In the previous week, larger financial institutions were able to absorb some of the deposits that were being withdrawn at a record speed from smaller banks in the wake of the collapse of Silicon Valley Bank (SVB). This week, however, the situation has taken a dramatic turn for the worse.
A massive quantity of deposits, totaling $90 billion, left the 25 largest banks in the United States last week. This marked a significant outflow of deposits. The most recent seasonally adjusted estimates on deposit withdrawals from the Federal Reserve show that chartered banks in the United States lost a total of around $213 billion in deposits between the failure of SVB during the weekend of March 10 and March 22.
The surge in withdrawals occurred as nervous savers acted quickly to get their money out of their accounts. A record-breaking loss of $196,4 billion in deposits was experienced by smaller banks within the first week after the collapse of SVB. On the other hand, the most recent week witnessed an about-face. In the last week, there was a rise of around $6 billion in assets at domestically regulated small banks. Notwithstanding this, the most recent estimates indicate that smaller banks have lost slightly more than $190 billion in value since the failure of SVB sent shockwaves throughout the markets.
As a result of consumers rushing to relocate their money to larger institutions in the week after the fall of SVB, large banks witnessed a rise in deposits during that time period. Yet, a reversal caused a significant drop in the previous week among the top 25 banks. The week that concluded on March 22 saw a decline of $89.7 billion in deposits held by big banks chartered in the United States. The week before, large banks brought in deposits totaling $67 billion more. With the collapse of SVB, the most recent figures reveal that significant banks in the United States have suffered losses totaling $22.7 billion.
The money market mutual fund industry has been one of the primary benefactors of the outflow of deposits. According to a report by the Financial Times, which cited statistics from EPFR, around $286 billion has flowed into money market funds in the United States so far in the month of March. It makes this past month the one with the newest arrivals since the peak of the COVID-19 epidemic in 2020.
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