The collapse of Silicon Valley Bank (SVB) has resulted in what many executives are calling, the most significant movement of deposits in a decade. Customers are flooding large U.S. banks with requests to transfer their funds from small lenders. JPMorgan Chase, Citigroup, and other big financial institutions are trying to accelerate the typical “onboarding” process to accommodate customers who wish to carry out immediate transactions. Deposit transfers from SVB and other local lenders to major banks increased last week and continued on Monday, March 13.
To cater to increased demand, the waiting period for opening an account has been lowered by JPMorgan. The bank is also speeding up the process by which corporate customers can access funds. This is to allow such customers to pay their employees by the end of the week.
Instead of the usual one to two weeks, Citigroup’s private bank is attempting to open accounts as soon as an application is submitted. Employees at several banks are now in positions related to account openings.
Are JPMorgan Chase and Citigroup taking advantage of SVB’s fall?
SVB’s collapse seems to be benefitting other large banks that now have a large influx of customers. However, executives claim they are treading carefully since they don’t want to be accused of taking advantage of the circumstance. According to people involved in these conversations, JPMorgan advised bankers not to actively pursue clients from smaller competitors.
Nonetheless, people are taking notice of JPMorgan and Citigroup’s clear advantage in the situation. According to Wells Fargo banking analyst Mike Mayo, “Goliath is winning in these less certain times.”
The U.S. Government announced emergency measures on Sunday, March 13, including a new Federal Reserve lending facility for banks. The steps saved additional banks from going underwater. However, depositors are still trying to transfer funds to bigger institutions like JPMorgan, Citigroup, and Bank of America.
After a few nervous days for bank depositors, large asset managers reported an infusion of money being removed from lenders. The fall of SVB brought to light for some depositors, the danger of keeping all of their capital under one institution. Several SVB’s business clients in the technology and life sciences sectors had been concerned that they would not be able to pay personnel or suppliers before authorities stepped in with a promise to guarantee all deposits.