It's raining money on Bank of America. Inflows of over $15 billion reportedly seen amid SVB fallout
By Barbara Kollmeyer
Too-big-to-fail banks are benefiting from deposit outflows from regional banks
The closure of three U.S. banks in the space of a week has led to an influx of fresh cash for Wall Street's biggest institutions, with Bank of America reportedly raking in over $15 billion in customer deposits recently.
The collapse of Silicon Valley Bank (SIVB), Signature Bank and crypto-friendly lender Silvergate Bank has apparently rattled customers of many regional and smaller banks, driving them to seek perceived safety in the bigger banks.
For Bank of America (BAC), that tsunami of money so far amounts to $15 billion, according to a Bloomberg report citing sources close to the matter that published Wednesday. A spokesman from the bank declined to comment to Bloomberg, and those shares were down 1.4% in premarket trading.
The report said other big banks such as Citigroup (C) and Wells Fargo (WFC) have also seen billions of new customer money, though those institutions have yet to divulge that information.
Read: Is your money safe? Where should you put your cash after Silicon Valley Bank closure? Financial advisers offer some tough love
Separately, State Street Corp. Chief Executive Officer Ron O'Hanley told Bloomberg TV that Tuesday's move by Moody's Investors Service's, which lowered its outlook on the U.S. banking system to negative from stable, was "a terrible overreaction."
"There were a lot of unique circumstances around the banks in question--both on the asset and liabilities side," O'Hanley said on Wednesday. "I don't think it's helpful when rating agencies treat entire sectors the same way."
Meanwhile, shares of several regional banks showed signs of continuing Tuesday's rebound on Wednesday, though most haven't fully recovered from severe stress seen in recent days.
Shares of First Republic Bank (FRC) rose 5% in premarket trading on Wednesday, but remain 51% lower for the week as of Tuesday, according to FactSet. Zions Bancorp. (ZION) shares fell 6% ahead of the open and remain 22% lower this week. Western Alliance Bancorp (WAL) stock rose 6%, but are down 39% on the week.
Investors have been grappling to keep up with fast-paced events in the financial sector in recent days. Over the weekend, the U.S. government rolled out the new Bank Term Funding Program to shore up unsecured deposits as Signature Bank collapsed over the weekend just days after Silicon Valley Bank, a unit of SVB Financial SIVB, shut down after a rush of withdrawals.
Read: SVB's collapse makes it impossible to say what stocks are worth as bond-market volatility explodes
And: 10 U.S. banks that have been the best earnings performers over the past 15 years--are any of them bargain stocks now?
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March 15, 2023 06:39 ET (10:39 GMT)
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