By: Jeffrey Nugent
The Federal Reserve is trying its best at trying to give large and small banks confidence since investors are still wary about the industry's low points.
Even with regulatory actions on Sunday, bank stocks took a big hit on Monday after SVB Financial Group's collapse, down 60%. Investors are questioning other banks that have questionable characteristics.
One factor that was considered was whether the bank had a significant number of deposits that were not insured, which could potentially be withdrawn quickly or would require the bank to adjust interest rates to encourage customers to keep their funds with the bank. First Republic Bank is down 61% on Monday after the bank mentioned that they had obtained more funding to ensure they have enough cash to meet their financial obligations from JPMorgan Chase and the Fed.
First Republic Bank is a bank that has many wealthy people and has about 120 billion uninsured deposits which are about two-thirds of the bank's total. Other banks are also similar like Comerica Bank which had about 65% of its deposits uninsured.
Citi Group and JPMorgan had more than a trillion worth of uninsured deposits at the end of 2022. Bank of America had around 700 million uninsured deposits which only decreased by 6% with other stocks decreasing by 10% or more. Size is a big part of whether the bank loses money with JPMorgan Chase only being down 2% since they have the largest assets with almost 4 trillion after 2022.
Sources: https://www.wsj.com/articles/investors-are-searching-for-safe-spaces-in-banking-89f652d7