BAC - FDIC wants big banks to shoulder cost of SVB Signature failures
2023-05-11 11:12:42 ET
The Federal Deposit Insurance Corporation proposed that the largest U.S. lenders should pay billions of dollars in additional fees to recover the FDIC's losses from backstopping uninsured depositors at Silicon Valley Bank ( OTC:SIVBQ ) and Signature Bank ( OTC:SBNY ), according to a Thursday release.
The FDIC estimated the moves back in March cost its Deposit Insurance Fund around $15.8B.
Under the banking regulator's so-called special assessment, banks whose assets total more than $50B would cover 95% of the cost. That includes megabanks like JPMorgan ( NYSE: JPM ), Bank of America ( NYSE: BAC ), Wells Fargo ( NYSE: WFC ) and Citigroup ( NYSE: C ). But those with less than $5B would be spared the payment.
“In general, large banks with large amounts of uninsured deposits benefitted the most from the systemic risk determination,” the FDIC said in a statement. The payments would not start until Q2 2024 and would be collected at an annual rate of about 12.5 basis points over eight installments.
"Assuming that the effects on capital and income of the entire amount of the special assessment would occur in one quarter only, it is estimated to result in an average one-quarter reduction in income of 17.5 percent," the release said .
The plan, of which an estimated 113 banks would be on the hook, still requires votes by the agency's board members.
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FDIC wants big banks to shoulder cost of SVB, Signature failures