U.S. banking behemoths attract flood of deposits after SVB collapse -sources

By Saeed Azhar and Lananh Nguyen

NEW YORK (Reuters) – U.S. consumers have flooded banking giants, including JPMorgan Chase & Co, Bank of America Corp and Citigroup Inc with deposits after the collapse of Silicon Valley Bank, sources familiar with the matter said.

The transfers, which one source said reached billions of dollars, came as investors fretted over the financial health of smaller regional lenders even after receiving assurances from U.S. President Joe Biden and other policymakers.

Large banks saw in influx of money from consumers and businesses in the last week as SVB teetered, one of the sources told Reuters. But the lenders have been careful not to solicit customers from other banks, many of whose stocks have plunged, out of concern that they could accelerate the outflows, two sources said.

The Financial Times reported on the outflows Tuesday, citing several people familiar with the matter.

Rating agency Moodys Investors Service on Tuesday changed its outlook on the U.S. banking system to negative from stable to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank, Silvergate Bank, and Signature Bank.

“Banks with substantial unrealized securities losses and with non-retail and uninsured U.S. depositors may still be more sensitive to depositor competition or ultimate flight,” it said.

Moodys said this could have adverse effects on funding, liquidity, earnings and capital.

Shares of U.S. regional banks such as First Republic Bank, Western Alliance Bancorp and KeyCorp have slumped on fears of possible bank contagion following the collapse of SVB and Signature Bank.

Those banks recovered some losses on Tuesday. For example shares of First Republic climbed nearly 40 percent after plunging more than 60% on Monday.

(Reporting by Saeed Azhar and Lananh Nguyen; Editing by Anna Driver)