The FDIC said it would require large U.S. banks to bear most of the cost of filling deposit insurance funds.

(Reuters file photo)

[Financial Channel/Comprehensive Report] The U.S. Federal Deposit Insurance Corporation (FDIC) said on Thursday (11th) that the deposit insurance fund due to Silicon Valley Bank (SVB), Signature Bank (Signature Bank) and First Republic Bank (First Republic Bank) The collapse, which lost $16 billion (about NT$493 billion), will require large U.S. banks to bear most of the cost of replenishing funds.

Reuters reported that the FDIC proposed at a board meeting that bank regulators would impose a 0.125% tax on uninsured deposits with lenders with assets exceeding US$5 billion (approximately NT$154 billion), based on the amount of uninsured deposits held at the end of 2022. special charges".

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Although the fee applies to all banks, lenders with assets of more than US$50 billion (about NT$1.5 trillion) will pay more than 95% of the fee, the FDIC said; lenders with assets of less than US$5 billion (about NT$154 billion) Banks do not need to pay any fees.

Some 113 banks are expected to pay the fee.

The charge is expected to be levied in eight quarters starting in June 2024 and can be adjusted for changes in estimated losses from the insurance fund.

FDIC officials pointed out that the extension of the collection time is aimed at reducing the impact on bank liquidity, and the impact on bank capital is expected to be negligible.

Credit Suisse (Credit Suisse) analyst Katzke (Susan Roth Katzke) wrote in the report that the top 14 US banks will need to pay about US$5.8 billion (about NT$178.7 billion) a year, which may cost them every Earnings on shares fell 3%.

JPMorgan is expected to pay about US$1.3 billion (about NT$40 billion) in annual fees, followed by Bank of America (BofA) at US$1.1 billion (about NT$33.8 billion) and Wells Fargo (Wells Fargo) at 8.98 billion. billion U.S. dollars (approximately NT$27.6 billion).

The three major banks declined to comment on the report.

Jaret Seiberg, an analyst at Cowen Washington Research Group, said the figure was higher than expected because the FDIC sought to recover funds in just two years.

The FDIC provides guarantees of up to US$250,000 (approximately NT$7.7 million) for customers’ bank deposits. According to data, by the end of 2022, the size of the FDIC fund will be US$128.2 billion (approximately NT$3.9 trillion).

Banks usually pay the FDIC quarterly to finance the deposit insurance fund, but after Silicon Valley Bank and Iconic Bank incurred huge costs following their collapse in March, the FDIC said it was necessary to impose additional fees on banks.

Both banks, which have a high percentage of uninsured deposits, suffered massive runs and failed banks after concerns over their finances arose.

To avoid contagion, the FDIC guaranteed all deposits at the two banks.

First Republic Bank was taken over this (May) month and sold to JPMorgan Jr., which is expected to cost the deposit insurance fund another US$13 billion (approximately NT$400.5 billion).

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