A year after the Bank of Silicon Valley went out of business, banks in the US are still paying to clean up the mess, and the cost could increase by about $4.1 billion.
According to the annual report released by the US Federal Deposit Insurance Corporation (FDIC) at the end of February, the FDIC currently estimates that the collapse of Silicon Valley Bank and Signature Bank will cause losses of 20.4 billion US dollars. This is 25% higher than the $16.3 billion forecast in November last year.
The consequence is that many institutions — large banks such as J.P. Morgan Chase, regional banks such as PNC Financial Services Group, and even some banks that are relatively local — may have to pay more to supplement deposit insurance funds. This is a reserve that the FDIC uses to protect savers when a bank fails.
Pittsburgh-based PNC said on Tuesday it expects an additional $130 million for the quarter to the $515 million expenses already included in the fourth quarter. Bank of New York Mellon said it adjusted its 2023 financial results to reflect an increase of $127 million in pre-tax expenses after the initial estimate of $505 million. Five Three Bank and Comerica Inc. both said they expect to pay more.
An FDIC representative declined to comment.