Banking Crisis: US Banks Borrow $475B While Small Banks Lose Over $500B

Key Points:

• US banks borrowed $475B last week, while small banks lost over $500B in just two weeks since the collapse of SVB.
• $1T has been withdrawn from the most vulnerable banks over the last 2 years, with $500B withdrawn since March 10th.
• Small banks borrowed twice as much money as large banks relative to their size.

Small banks have lost over $500B in two weeks while US banks borrowed $475B. Read about the alarming numbers of the ongoing banking crisis.

The Kobeissi Letter has recently reported that US banks have borrowed a staggering $475 billion in the previous week, while small banks have lost over $500 billion in just two weeks since the collapse of SVB.

The numbers revealed by JP Morgan are equally alarming, as they indicate that $1 trillion has been withdrawn from “the most vulnerable” banks over the last two years, with $500 billion withdrawn since March 10th.

The situation is particularly dire for small banks, which have borrowed twice as much money as large banks relative to their size, as revealed by a breakdown of the figures. According to the latest Fed data, banks lost approximately $100 billion in deposits just last week, which worsens the situation.

The crisis has spread beyond the US to Europe, with Credit Suisse, CS, and Deutsche Bank credit default swaps hitting a 4-year high. As expected, the banks’ stocks have fallen, with regional bank ETF $KRE making a new low. Despite the magnitude of the problem, solutions seem to be elusive. US Treasury Secretary Yellen’s announcement that the US was considering backing all deposits was welcomed by many. Still, it was short-lived, as she made a statement one day later that they were no longer considering it.

The Wall Street Journal reports that nearly 200 banks are still facing the same issues as SVB, which is a cause for further concern. The fact that the banking crisis has persisted for such an extended period, and the uncertainty surrounding it, makes it challenging to predict what the future holds. While larger banks have been able to weather the storm, small banks are feeling the brunt of the crisis, with more withdrawals and borrowing than their larger counterparts.

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