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US Banks Bounce on Data

It has been a month since US regional banking crisis surfaced and led to Federal Reserve announcing various measures to contain a large panic. These measures seem to have worked for now as the recent bank data suggests a small reversal.

The US commercial bank deposits increased by $37 Bn for the week ending 5th April. This is a slight improvement but total deposits are still lower by almost $500 Bn since the start of the crisis.

The US commercial bank lending also increased by $10.2 Bn with the largest rise reported by Large banks. There was also some easing of financial conditions during the week.

The Fed balance sheet continues to decrease and this week even the special program and other windows assisting liquidity issues reported a drop in usage.

All this indicates that a large continued ban run has been avoided for now. But will there be no further issues or a repeat of such an event is nothing more than speculation?

With this trend, large banks and asset management companies like JP Morgan and Blackrock have gained market share. This might result in a longer trend where many small and medium banks that were liquidity providers during 2020-22 might not exist by the time the full crisis cycle is completed.


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