U.S. banks in the first quarter experienced their largest deposit outflows since 1984 in the amount of $472 billion amid bankruptcies of major financial institutions in the country.
According to a report of the Federal Deposit Insurance Corporation (FDIC), U.S. banks in January-March 2023 faced the largest outflow of deposits in 39 years. Their volume amounted to 472 billion dollars.
Thus, the total amount of deposits of banks in the U.S. dropped by a record 2.5%. At the same time, profits in the banking sector as a whole remained at the same level.
The regulator monitors indicators of more than 4.6 thousand commercial banks and savings institutions.
The reduction of this indicator was mainly due to uninsured deposits, which exceed 250 thousand dollars. Insured deposits were up $255.1 billion, or 2.5 percent, on the back of bankrupt Silicon Valley Bank (SVB) and Signature Bank.
The FDIC notes that deposit outflows were offset by an increase in wholesale funding, which rose 14.4 percent at the beginning of the year.
According to the FDIC, deposit outflows have been going on for nearly a year, and their volume has been increasing.