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US banks braced for large deposit outflows

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US banks braced for large deposit outflows

By Tracy Alloway and Camilla Hall in New York

July 30, 2014 8:54 pm

US banks are steeling themselves for the possibility of losing as much as $1tn in deposits as the Federal Reserve reverses its emergency economic policies and raises interest rates.

JPMorgan Chase, the biggest US bank by deposits, has estimated that money funds may withdraw $100bn in deposits in the second half of next year as the Fed uses a new tool to help wind down its asset purchase programme and normalise rates.

Other banks including Citigroup, Bank of New York Mellon and PNC Financial Services have also said they are trying to gauge the potential effect of the Fed’s exit on institutional or retail depositors who might choose to switch to higher interest accounts or investments.

“There are investors, traders and sellside analysts that are very concerned about it,” said one top-10 investor in several large US banks.

An outflow of deposits would be a reversal of a five-year trend that has seen significant amounts of extra cash poured into banks thanks to the Fed flooding the financial system with liquidity. These deposits, which act as a cheaper source of funding, have helped banks weather the aftermath of the financial crisis.

https://www.ft.com/cms/s/0/58848270-1729-11e4-8617-00144feabdc0.html#ixzz392EVEzmc

One thought on “US banks braced for large deposit outflows

  1. I told you alllllll, bend over and kiss your ass good buy.

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