© Reuters. Silicon Valley Bank branch in San Francisco, USA 03/13/2023 REUTERS/Kori Suzuki
(Reuters) – Deposits at small U.S. banks declined sharply after the collapse of Silicon Valley Bank on March 10, data released by the Federal Reserve showed on Friday, marking the biggest weekly drop since 2007.
Small bank deposits fell to $5.46 trillion in the week ended March 15 from $5.58 trillion the week before, in the biggest weekly decline in value and biggest decline as a percentage of total deposits since the week ends on March 16, 2007.
Lending at small banks, defined as all those not among the top 25 commercial banks in the US, increased by $253 billion over the same period to a record $669.6 billion, weekly Fed data showed.
“As a result, small banks had an additional $97 billion in cash on hand at the end of the week, suggesting that some of the loans were to build up reserves as a precautionary measure in case depositors ask for their cash to be redeemed,” the analyst wrote. of Capital Economics, Paul Ashworth.
Deposits at major US banks rose for the week to $10.74 trillion from $10.67 trillion in the week ending March 8, the data showed.