Many banks are exposed to losses from unrealized losses on commercial real estate and securities, and are at risk of a liquidity crisis due to withdrawals by large uninsured depositors, according to an analysis by financial experts at Florida Atlantic University. It is said that an increasing number of banks are increasing the number of banks.
Analysis by financial experts at Florida Atlantic University shows that many banks are exposed to losses from unrealized losses on commercial real estate and securities, and many more are losing liquidity due to withdrawals from large uninsured depositors. The risk of falling into a crisis is increasing.
Based on first quarter 2024 regulatory data, 94 of the 1,028 banks with over $1 billion in assets had uninsured deposits as a percentage of total deposits, according to the Liquidity Risk Index by Exposure to Uninsured Deposits. reported that it was more than 50%. Seven of the 33 banks with assets over $100 billion exceed the standard. Bank of New York Mellon has an uninsured deposit ratio of 100%, followed by State Street Bank at 92.6%. Northern Trust, 73.9%. Citibank, 72.5%. HSBC Bank, 69.8%. JP Morgan Chase has 51.7% and US Bank has 50.4%.
“Pennsylvania’s Republic First Bank, the first bank to fail this year, was No. 87 on last quarter’s list with a ratio of 51.5%,” said Lynn distinguished scholar and professor of finance Rebel A. Cole. the doctor said. Business College. “All banks on this list are at serious risk of failure from uninsured depositors if they show weakness due to commercial real estate exposure or unrealized losses on securities.”
The index, part of Florida Atlantic University’s Banking Initiative, tracks 1,028 companies with total assets of more than $1 billion and uses regulatory data to calculate uninsured deposits as a percentage of total deposits. Banks reporting this ratio above 50% are at increased risk of failure due to uninsured depositors.
Three of the four largest bank failures in recent U.S. history occurred in 2023. These bank failures were caused by the rapid withdrawal of uninsured deposits following adverse news regarding banks’ exposure risks. The risk of more depositor runs on banks is growing by the day as concerns grow over unrealized losses on investment securities and commercial real estate loans.
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