Depositors pull nearly $60bn from three US banks as Apple raises pressure

Yahoo Finance ^ | 4/17/23 | Brooke Masters and Madison Darbyshire

[CFW]

Big US financial groups Charles Schwab, State Street and M&T suffered almost $60bn in combined bank deposit outflows in the first quarter as customers continued to move their money in search of higher returns. The deposit flight has been turbocharged by the collapse last month of Silicon Valley Bank and two other US lenders, with cash moving out of bank accounts at a pace not seen since the aftermath of the 2008 financial crisis. In a fresh sign of the threat to traditional banks, Apple and Goldman Sachs on Monday announced the launch of a new savings account in the US that will pay a market-leading 4.15 per cent a year.

US savers have been yanking cash out of low-yielding bank accounts and ploughing it into alternative products such as money market funds or Treasury bills that pay better returns, allowing them to take advantage of the sharp interest rate rises implemented by the Federal Reserve. The average US bank account savings rate is just 0.37 per cent, according to government data, versus the Fed’s benchmark rate of 4.75 per cent to 5 per cent.

[CFW]

Many consumers have quit paying attention to the bank sector after the issues with SVB and Signature went off the front page thinking "Well, they fixed that problem so all is good". All may not be so good after all.

[proxy_user]

State Street is a wholesale custody bank. They don’t make loans, and they don’t have retail customers. Most of their revenue is custody fees.

[DugwayDuke]

Schwab is paying 4.68% on money market fund now.

[SaveFerris]

It’s Transitory(TM)!!!

[SunkenCiv]

15 largest banks in the US as of Dec. 31, 2022
https://www.bankrate.com/banking/biggest-banks-in-america/

20 largest as of March 2023
https://www.moneycrashers.com/largest-banks-us-assets/

The End of Faking It in Silicon Valley
https://freerepublic.com/focus/news/4146276/posts

[monkeyshine]

So the 1 Year treasury is paying 4.75% give or take. Apple+ Goldman can park your cash and make about .6% on the holdings. Plus if you actually spend the money using your Apple wallet they make another slice in merchant fees. Spend it in an Apple store they make even more.

If rates drop, that 4.15% rate won’t stick.

Maybe a good deal for Goldman that doesn’t have a big presence in retail banking. Hooking up with Apple gets them a (potentially) virtual bank in the pockets of a big chunk of Americans.

[Osage Orange]

Oh..wow, cool..4.68%!!! LOL!!!

I realize that people out there...have IRA's and MM Funds...

I also know that some people with IRA's have had half their investment vanish.

I've not had an IRA in over 40 years. There are better ways to make your money work.

[rexthecat]

I also know that some people with IRA's have had half their investment vanish. I've not had an IRA in over 40 years. There are better ways to make your money work.

My wife and I have each had a 401k/IRA for many years. Our money has moved up and down with the markets, but our losses have always been temporary. If people have lost half their money in their IRA's, I agree, they should put it somewhere else.

[G Larry]

OUCH!

I don't think this is over.

[CivilWarBrewing]

Sure, I mean EVERYBODY can afford silver and gold, right?

[Osage Orange]

I have some silver coins...most are collectible coins. Mint State MS-65 coins....

But I don't own any bullion. Silver or Gold. If that's what you mean.....

That was a long time ago...when I bot some collectible coins....

[mac_truck]

Charles Schwab & Co. lost deposits of $41 billion in Q1...there’s no reason to lump in the other two banks to mitigate those losses.

[NautiNurse]

If rates drop, that 4.15% rate won’t stick.

And if the rate goes up, the competitive savings interest rate will go higher. 4.15% for regular savings is very reasonable today. Other institutions with similar rates also offer 5+% for 12-14 month CD. It is silly to keep money labeled as "savings" in an account which earns an insulting 0.1% annually these days.

[Tunehead54]

Look at Schwab Reminder bump!

[Osage Orange]

5% for a whole year.... is a very poor rate.....Plenty of other ways to make much more....IF you how to do it.

[CurlyDave]

...Plenty of other ways to make much more....IF you how to do it...

Well please go ahead and tell me some of those ways.

[catnipman]

i just moved all my free cash out of schwab’s .45% sweep accounts and their FDIC bank account into 4.54% short term treasury money market funds ... can’t believe i didn’t do this sooner ... now i just keep enough cash in my checking account to pay bills and such ... that account is linked to schwab, so selling money market funds and transferring funds to the checking account takes just a couple of business days ...

[catnipman]

4.68% is a great return if the money market fund is in nothing but short term treasury notes ... about as safe as it gets ... not sexy ... but safe ...

[Osage Orange]

I disagree...but that is me.

[catnipman]

btw, you keep telling us how easy it is to get much higher returns, but refuse to actually give us any specifics ... which tells me that you’re just full of hot air ...