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Spokane, Washington  Est. May 19, 1883
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Bank of America gets over $15 billion in deposits after SVB fails

March 15, 2023 Updated Wed., March 15, 2023 at 3:01 p.m.

 (Jeenah Moon/Bloomberg)
(Jeenah Moon/Bloomberg)
By Sridhar Natarajan and Katherine Doherty Bloomberg

Bank of America mopped up more than $15 billion in new deposits in a matter of days, emerging as one of the big winners after the collapse of three smaller banks dented confidence in the safety of regional lenders.

The inflows offer a first glimpse into the deluge of deposits that made its way to the country’s largest banks as customers fearful of a spreading crisis sought refuge in the firms seen as too big to fail. The money flowing into the second-largest U.S. bank was described by people with direct knowledge of the matter, who asked not to be identified as the information isn’t public.

Silicon Valley Bank’s seizure Friday, the biggest U.S. bank failure since the financial crisis, was precipitated by fleeing depositors and sent shock waves across the global financial system. It also forced the Biden administration to put in place extraordinary new measures to fortify faith in the banking system. In the last week, crypto-focused bank Silvergate Capital closed shop and authorities shut down New York-based Signature Bank on Sunday.

A spokesperson for Bank of America declined to comment.

Other banks like JPMorgan Chase, Citigroup and Wells Fargo also raked in billions in new deposits, though the figures have not been disclosed yet.

Wall Street banks saw a surge in deposits during the pandemic as customers and businesses stashed away cash from stimulus measures. As the pandemic receded, government assistance programs ran off and interest rates rose, the cash started heading out the door. At the end of last year, deposits at Bank of America were down $8 billion compared to the end of the third quarter.

The influx of deposits may, for now, temper a trend that investors have worried about for months: a slowdown in net interest income growth. The going fear was that the biggest U.S. banks, facing a drop in deposits from customers hunting for higher yields, would finally have to pass along some of the benefits it was getting from Fed rate hikes onto savers.

That seems less necessary now as deposit balances once again begin to swell amid the collapse of SVB.

Moody’s earlier this week cut its outlook for the U.S. banking system to negative from stable, citing the run on deposits at Silvergate, SVB and Signature Bank. State Street Chief Executive Officer Ron O’Hanley called the decision a “terrible overreaction” in an interview with Bloomberg TV on Wednesday.

“There were a lot of unique circumstances around the banks in question - both on the asset and liabilities side,” O’Hanley said. “I don’t think it’s helpful when rating agencies treat entire sectors the same way.”

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