Recent data paints a vivid picture of the global banking landscape, revealing the substantial withdrawals from bank accounts over the past year. The Federal Reserve of St. Louis reports that U.S. banks experienced a remarkable $605 billion in deposit outflows within a single year.
Meanwhile, S&P Global Market Intelligence’s data highlights a more extensive trend, showing that total deposits in several European countries, including France, Germany, Spain, Italy, as well as the Benelux and Nordic regions, collectively witnessed a colossal drop of approximately $950 billion over 12 months. This results in an astounding $1.55 trillion in deposit flight across these regions.
The driving force behind this massive shift is the pursuit of higher returns, with affluent clients significantly impacting the profitability of major American banking institutions, as per a recent Yahoo Finance report.
Impact on Major U.S. Banking Institutions
Notably, JPMorgan Chase, Wells Fargo, Bank of America, and Citigroup have all reported deposit outflows within their wealth management divisions during the second quarter of this year. Curinos data further reveals that wealth management and corporate accounts have experienced a substantial 13% reduction in deposits from the beginning of the year through July.
In response to this ongoing challenge, these banks have launched new offerings, such as certificate of deposit (CD) savings accounts, aiming to remain competitive with money-market accounts that have attracted hundreds of billions of dollars in inflows over the past year.
While these efforts may be showing signs of success, Curinos data suggests that institutional deposit flight from major U.S. banks paused in July, with the data for August still pending release.