KBRA Releases Report: Bank Deposits Today and Tomorrow

NEW YORK--()--Kroll Bond Rating Agency (KBRA) announces the release of a report on bank deposits “Bank Deposits Today and Tomorrow.”

In this report, KBRA reviews current concerns in the bank space that deposits in the banking system are growing too slow relative to loan volumes and could lead the industry to wage deposit wars and increase dependence on less-stable, non-deposit funding. However, fears that the Basel III Liquidity Coverage Ratio, which emphasizes retail deposit funding, combined with normal competitive pressures from retail money market funds when the Fed is tightening, will increase deposit beta faster than in past interest rate cycles are belied by the current abundance of deposits relative to loans. A review of the macro and micro data confirms these concerns as premature.

However, technological and social changes in retail deposit behavior combined with six years of Fed Zero Interest Rate Policy (ZIRP), have eroded the concept of core deposits and blurred distinctions with brokered deposits. The new Crapo Act liberalizes Federal Deposit Insurance Corporation (FDIC) regulations defining brokered deposits and directs that the FDIC amend the definition to provide a limited exemption for reciprocal deposits.

To view the report, please click here.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Kroll Bond Rating Agency
Analytical:
Ethan Heisler, CFA, 516-359-0975
Senior Director
eheisler@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical:
Ethan Heisler, CFA, 516-359-0975
Senior Director
eheisler@kbra.com