Goldman Sachs picks the winners and losers in regional banks after the SVB collapse
The banking crisis continues to keep investors on edge about the health of regional banks. Now Goldman Sachs has identified what it said are the biggest winners and losers in the industry in the aftermath of the Silicon Valley Bank collapse. The Wall Street investment bank said the biggest short-term risk for regional banks could come from shifting market shares of deposits as corporates look to diversify. That includes moving capital to bigger banks, using a wider variety of lenders and moving money into Treasurys or money market mutual funds, Goldman said. Meanwhile, there is the potential that regional banks will need to “pay up” to prevent deposits from moving to other banks “or leave bank balance sheets entirely,” Goldman said. Additionally, the need for more capital for banks means stock buyback plans will be crimped, at least in the short term, Goldman said. Factoring in all these risks, Goldman said BankUnited and KeyCorp are the most in danger of feeling the financial fallout. Miami Lakes, Florida-based BankUnited has 76% of its total deposits in commercial deposits, part of which could leave or diversify away to other banks, and only 30% of total deposits are FDIC-insured, Goldman said. As for Cleveland-based KeyCorp, Goldman said the bank has one of the biggest capital deficits versus their targets, indicating that buybacks will most likely be removed. Shares of BankUnited and KeyCorp have both lost more than 30% this month. On the flip side, Goldman said Fifth Third Bancorp , Regions Financial Corp , Huntington Bancshares and Synovus Financial Corp could see the smallest impact from the banking upheaval. Huntington Bancshares and Regions Financial each have more than 60% of total deposits FDIC-insured, while Fifth Third has 58%, all above the industry average of about 50%, Goldman said. Goldman said Birmingham, Alabama-based Regions Financial along with Citizens Financial and First Hawaiian may see fewer deposit outflows “given more granular deposit bases and more retail oriented deposit bases.” These stocks are all down more than 20% in March as investors spooked by the crisis dumped regional bank shares.