Cheap deposits have become a painful pandemic hangover for US banks

US banks have been hit by the pandemic hangover of cheap deposits. Rising rates have slashed the value of bonds that lenders bought with customer money, creating losses of up to $600bn.

March 13, 2023 . 4:37 AM

1 min read

Silicon Valley Bank was taken over by US regulators on Friday.
Banks bought bonds with their bounty of cheap deposits but as rates have jumped in the past year, the bonds have sunk in value, creating as much as $600bn in paper losses.
Investors are getting a better picture of the risks some banks have been taking with their excess deposits.
$4.2tn in deposits poured into US banks over the past three years, with only 10% going to new lending.
Banks with big Treasury books have the most problems, with BofA's losses in the past year on its securities portfolio rising to over $110bn.