US banks’ non-core funding dependence ratio jumped in 2023

BHCs’ aggregate figure almost doubled to post-pandemic high last year

The proportion of long-term assets financed with short-term, non-deposit funding at US banks doubled to a post-pandemic high last year, suggesting a systemic shift into more volatile liquidity sources after March’s regional-bank liquidity shock.

The aggregate non-core funding dependence ratio across bank holding companies (BHCs) with assets of $3 billion or more stood at 13.2% at end-2023, up from 7.1% at the end of 2022 and the highest since Q1 2020’s 16.6%, analysis by Risk Quantum shows.

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