: Citi analyst sees ‘ample’ liquidity in banks to cover deposit withdrawals


This story was updated to change the percentage coverage of uninsured depots at US Bancorp to 124%, which includes an adjustment for its Union Bank acquisition.

Regions Financial Corp. RF, +1.89%, KeyCorp KEY, +4.48% and Fifth Third Bancorp FITB, +0.22% top a list of nine regional banks as measured by total available liquidity to cover potential deposit outflows, Citi banking analyst Keith Horowitz said in a research note on Thursday. Regions currently has about 145% of available liquidity to cover its uninsured deposits, followed by 136% for KeyCorp and 134% for Fifth Third Bancorp. Comerica CMA, +0.25% ranks at the bottom of the list with 96% coverage of its uninsured deposits; also Citizens Financial Group Inc. CFG, +4.23% with 108% and Truist Financial’s 119%. U.S. Bancorp USB, -0.89% has 124% of available liquidity, as adjusted to reflect its acquisition of Union Bank. “We recognize that funding the balance sheet with wholesale funding would present a material earnings headwind, but the purpose of this exercise is to show that sufficient liquidity is available even in the case of significant deposit outflow,” Horowitz said. Debt levels reported by the Federal Home Loan Bank, which provides extra debt to bank, has leveled off, which “suggests either banks’ demand for immediate funding has cooled, or they are turning to other facilities,” Horowitz said. The KBW Nasdaq Bank Index BKX, +0.17% is down 22.6% so far in 2023 as the March 10 failure of Silicon Valley Bank has impacted the sector, compared to a 2.8% year-to-date increase by the S&P 500 SPX, +0.30%. The Financial Select SPDR Fund XLF, -0.27% has fallen 9.3% in 2023.

This article was originally published by Marketwatch.com. Read the original article here.

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