Massive withdrawal of deposits from American banks

According to Iran Economist, citing Rasha, concerns about the health of the American banking sector are increasing before the release of deposit data, which will be released when major US banks report their first quarter earnings.

JP Morgan, Citi and Wells Fargo are set to begin their earnings season reviews on Friday.

Banking analysts estimated that JP Morgan, Wells Fargo and Bank of America lost $521 billion in deposits last year in the worst recession in a decade. In the first quarter alone, the decline reached $61 billion as a late influx of liquidity following the crisis at three US lenders failed to offset the outflow of funds to those offering higher interest rates.

In early March, massive deposit defaults caused two lenders, Silicon Valley Bank and Signature Bank, to fail within days. A third lender, First Republic, ended up receiving $30 billion in deposits from top Wall Street banks. Big lenders stepped in amid investor fears that First Republic could become the next US bank to fail.

Bank deposits have fallen since the start of last year amid high inflation eating into savings, thus encouraging depositors to seek higher returns on deposits.

Recent developments have also caused banking stocks to fall. The KBW Bank Index, which tracks leading lenders, lost 25 percent in March alone. Regional banks were the biggest losers last month, with First Republic Bank seeing its stock tumble 89 percent.