Silicon Valley Bank's collapse is “not a crisis in the making” according to JP Morgan, although Europe is “already optimistic over deposits.”
The broker believes the situation is somewhat unique and is concerned that market expectations in Europe are already over-optimistic on deposit flows and betas.
Analysts also note there will be increased investor scrutiny on banks.
Specifically, investors will be keeping an eye on bond portfolios as a percentage of deposits, mark-to-market of Available for Sale (AFS) as well as Held to Maturity (HTM) books and deposit outflows and the pace of deposit beta increases.
JP Morgan also expects increased regulatory oversight of smaller banks and the liquidity-related bonds in the banks.
“Lastly, we need to watch out for short-term further impacts on US regional banks and potential indirect curve balls from the VC market on European Banks,” said the broker.