Report: Big Banks See Uptick in Deposits After SVB Collapse

Silicon Valley Bank’s downfall has reportedly brought more business to America’s larger lenders.

Following last week’s failure of Silicon Valley Bank (SVB) — bookended by the collapse of Silvergate Bank and Signature Bank — JPMorgan Chase, the largest bank in the country, received billions in deposits, Bloomberg News reported Tuesday (March 14).

The report, which cites unnamed sources, says other major banks, including Citigroup, Wells Fargo and Bank of America, have all seen higher volumes than usual amid fears of a worsening banking crisis.

“The top six banks in the U.S. are and have been too big to fail, the financial crisis over 10 years ago demonstrated that,” Michael Imerman, an assistant professor at the University of California Irvine’s business school, said in an interview with Bloomberg. “So it’s safer to go with a name with a higher degree of certainty.”

The recent banking failures have unfolded over a five-day period in the last week. PYMNTS reported last Wednesday (March 8) that Silvergate Capital announced it would liquidate its Silvergate Bank, days after saying in a regulatory filing it had doubts about the future of the business as a “going concern.”

On Friday (March 10), SVB abandoned an earlier plan to raise capital and began looking for a seller. By the end of the day, California’s banking regulator had closed the bank and put it under the control of the Federal Deposit Insurance Corporation (FDIC) following a run on deposits.

A similar run led to the downfall of Signature Bank two days later, as it too was taken over by regulators. The FDIC has said depositors for both it and SVB will be made whole.

The FDIC also tried to auction off SVB this weekend but was unsuccessful in finding a buyer. A report Monday (March 13) by The Wall Street Journal said the agency is planning a second auction, though a date has not been set.

President Joe Biden, meanwhile, has called for an investigation into the collapse, saying Monday that there needed to be a “full accounting” on what went wrong at SVB.

One answer to why SVB failed could lie in its “heavily concentrated customer base,” Ingo Money CEO Drew Edwards said in a Tuesday interview with PYMNTS.

A natural response, he said, could be a trend in which companies begin thinking about splitting their business across multiple banks, no matter the strength of the financial institutions.

“This can be done but will create inefficiencies unless their partners are set up to split volume across sponsor banks, which we already do in our business,” Edwards said.

He added that if he had a billion dollars, he wouldn’t put it in one place, saying, “I can’t stand single points of failure anywhere in our value chain.”