ANALYSIS: Depositors are continuing to pull their money from smaller US lenders as investors worry about the $US2 trillion in unrealised losses in the US banking system
US small and midsized banks enjoyed a brief interlude of calm last week, but beneath the surface the heavy continued exodus of deposits meant that strains in the US banking system were building.
On Friday, US Treasury Secretary Janet Yellen called an emergency meeting of top US banking regulators.Following the sudden collapses of Silicon Valley Bank and Signature Bank earlier this month, the 11 largest US banks banded together to deposit $US30 billion in First Republic to prevent a spreading panic from engulfing the San Francisco lender.
Deposits in US commercial banks fell by close to $US100 billion for the week ended March 15, according to figures posted by the US Federal Reserve. US banks are sitting on a total capital buffer of $US2.1 trillion. But, according to a recent academic paper, total unrealised losses sitting in the US banking system – on their combined loan and bond portfolios – amount to a staggering $US2 trillion.
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