Leading US banking institutions like JP Morgan, Citigroup Inc and Bank of America have told their employees not to poach clients of the besieged banks, who are witnessing massive outflow of deposits amidst the crisis triggered by the collapse of Silicon Valley Bank and Signature Bank.
In a memo sent out to all employees on March 13, as seen by Reuters news agency, JP Morgan said they “should never give the appearance of exploiting a situation of stress or uncertainty,” adding, “We do not make disparaging comments regarding competitors.”
The branch employees were told to “refrain from soliciting client business from an institution in stress,” according to extracts seen by Reuters.
Citigroup has also given a similar note to its business heads, Reuters reported citing sources. The guidance includes not speculating about other banks or market rumours.
Similarly, Bank of America Corp briefed their employees asking them not to go after the customers of the embattled banks or doing anything to exacerbate the situation.
The collapse of the SVB and Signature Bank—the second and third largest lenders to fail in US history—forced the customers to move about half a trillion dollars of deposits from “vulnerable” banks to bigger institutions this month, JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a note Wednesday, according to Reuters.
As such, many banking giants absorbed these deposits as they are required by regulators to hold more capital to withstand shocks.
Though lenders have traditionally competed for customers, the loss of confidence on the country’s banking system in the last two weeks has sparked fears that it could lead to a broader panic.
(With inputs from agencies)
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