Big Banks Agree to Historic $30B Deposit Injection in First Republic

Re:Big Banks Agree to Historic $30B Deposit Injection in Fir... by michaelt on Friday March 17, 2023 @08:50AM (#35196421)

As I understand things, the problem at SVB was that they had customer deposits tied up in multi-year treasury notes which are among the most secure investments going but they couldn't withdraw the money fast enough to keep up with customers' instant-access accounts.

Having your money be secure but inaccessible for several months is obviously a problem if you're a business that needs to make payroll, or a crypto exchange that needs to allow customer withdrawals.

If the bank has plenty of cash but some of it's time-locked, then JPMorgan aren't at risk of losing their entire $5bn - they merely risk having it tied up for a year or two, perhaps getting an uncompetitive interest rate.

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Re:Big Banks Agree to Historic $30B Deposit Injection in Fir... by ec109685 on Friday March 17, 2023 @10:10AM (#35197307)

It’s also a problem if another bank is offering a higher interest rate. Customers will smartly ask for their deposits back to get interest elsewhere requiring that a bank sells its assets early, which isn’t possible to do so if they are locked into long dated underwater assets.

[ Parent | on HN ]