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$620 billion of unrealized losses are on U.S. banks' books
By Noah Buhayar, Jennifer Surane, Andre Tartar, Raeedah Wahid, Dean Halford, and Hayley Warren
Bloomberg News
Friday, March 31, 2023
The investment losses that helped take down Silicon Valley Bank are a problem, to one degree or another, across the U.S. financial system. In total the industry ended last year with $620 billion of unrealized losses on its books from investments in low-yielding bonds.
For most banks, the issue is manageable.
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Bonds held in investment books represented less than a quarter of the banking system's $23.6 trillion of assets in December, and unlike SVB, lenders usually have a wide array of depositors who are unlikely to all need money around the same time.
For the biggest banks, the risks are even smaller. They are perceived as too big to fail. What's more, the recent rally in the Treasury bond market -- sparked, ironically, by the jitters about the health of the banking industry -- is helping to shrink the $620 billion of paper losses. (In the coming weeks, banks will start to post first-quarter data.)
And yet as depositors keep gradually withdrawing their money and shifting it into money market funds and other investments, banks are facing a squeeze. They're being pressed to pay more for funding while their revenue is limited by the investments they made in low-yielding bonds during the pandemic. That in turn could curb their ability to lend to consumers and businesses, slowing the economy. ...
... For the remainder of the report:
https://www.bloomberg.com/graphics/2023-svb-exposed-risks-banks/
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