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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Brian Sullivan who wrote (84615)	12/15/2011 1:33:27 AM
From: elmatador	Respond to of 218309

Symbolic only.

To: Brian Sullivan who wrote (84615)	12/15/2011 1:38:10 AM
From: elmatador	Respond to of 218309

Foreign-owned banks operating in the US have suffered their largest six month fall in deposits on record in what some analysts have described as a “flight to safety” from European banks to domestic institutions. Dive in deposits at foreign-owned banks in US By Ajay Makan in New York Foreign-owned banks operating in the US have suffered their largest six month fall in deposits on record in what some analysts have described as a “flight to safety” from European banks to domestic institutions. Cash on deposit at foreign-owned banks fell $291bn, or 25 per cent, to $879bn from the end of May to the start of December, the first time deposits in the sector have fallen for six consecutive months since 2002, according to Federal Reserve data. “We have heard of a lot of US companies that were doing business with non-US banks looking at the news, and saying I want to be somewhere safer,” said Matt Burnell, large-cap US bank analyst at Wells Fargo. “For those companies somewhere safe means domestic banks like PNC, JP Morgan and US Bancorp that are perceived to have higher quality deposit franchises.” While the Federal Reserve only publishes data on foreign-owned banks once a year, in June, quarterly filings by individual subsidiaries of European banks with the Federal Deposit Insurance Corporation show falls in deposits. Deposits at Deutsche Bank’s Americas Trust Company fell by $2.1bn or 6.8 per cent during the third quarter, while deposits at Barclays’ Delaware subsidiary fell by $397m or 5.6 per cent. Overall, foreign-owned banks’ share of US deposits has fallen from a peak of 16.8 per cent in May 2008, when the sector held $1.15tn, to just 10.3 per cent in the week ended November 30. That appears to be a result of customers shifting deposits between banks. However, that share is set to fall even further as US institutions acquire assets from foreign competitors. Credit card company Capital One is set to take over the US subsidiary of Dutch bank ING, ING Direct USA, which held $88bn in deposits at the end of June, while US regional bank PNC will acquire a Royal Bank of Canada unit, which held $22bn at the end of September. Analysts are divided on what is driving the trend. Some suggest European banks are actively pushing away depositors by offering poor interest rates. “Most US households are deleveraging and retreating from a volatile stock market, which should be translating into deposit growth for everyone,” said Jefferson Harralson, US bank analyst at Keefe, Bruyette and Woods. “For non-US banks not to be benefiting suggests a deliberate strategy to shrink balance sheets to improve capital ratios.” Others say foreign-owned banks have suffered because they dominate the market for certificates of deposit – savings that are tied up for a long period of time at a fixed interest rate. As interest rates on offer for time deposits have fallen with Treasury yields, individuals have been less willing to tie up their cash in such certificates. According to Federal Reserve data, foreign banks hold just over half of the “time” deposit market, which includes CDs. Time deposits of more than $100,000 at foreign banks have fallen more than 30 per cent since late May. The deposit flight from foreign-owned banks comes as total deposits in the US banking system hit an all-time high of $8.46tn at the start of November. Deposits at domestic US banks have increased by 10 per cent or $663bn so far this year. The biggest beneficiaries have been JP Morgan and Wells Fargo, which saw deposits increase by $96.9bn and $57.8bn respectively in the third quarter. “There’s no doubt that some US banks have benefited from a flight to safety,” said Richard Staite, US banks analyst at Atlantic Equities. “That means there is less pressure on them to raise long-term funding, which is a major benefit in the current market.” According to Goldman Sachs borrowing by US banks has declined 19 per cent year-on-year since January 3, because deposit inflows have improved banks’ wholesale funding bases.