A few massive banks have now become riskier due to the increasing amount of unrealized losses big enough to wipe out customer accounts.
JPMorgan Chase just revealed tens of billions of dollars in losses on securities, according to a new report on the company’s overall balance sheet.
The banking giant is now stuck with roughly $40 billion in unrealized bond losses as of Q3 of this year, which is a 20% rise over the previous quarter, reports Barron’s.
The new numbers were located in a footnote on the firm’s third-quarter financial supplement and were higher than an expected $34 billion loss.
“The news follows a new quarterly report from Bank of America revealing it now has a total of $131.6 billion in unrealized losses,” reports Daily Hodl.
“Although Wells Fargo and Citigroup have also reported third-quarter earnings, they have yet to reveal the latest stats on their own unrealized losses.”
In Q2 of this year, Wells Fargo said it had $40 billion in unrealized bond market losses, while Citigroup had $25 billion in paper losses.
The dangers of unrealized losses came into focus early this year amid the collapse of Silicon Valley Bank.
These massive number figures only make these banking giants riskier to bank with.
SVB’s sudden failure back in March was sparked by an announcement that it had booked a $1.8 billion loss from selling a portion of its underwater bond portfolio.
What’s alarming is that as a whole, Moody’s estimates that the US banking industry is facing approximately $650 billion in unrealized losses, as reported by Reuters.
“Those losses stem from a historic collapse in bonds amid the Fed’s push to keep interest rates higher for longer,” says Daily Hodl.
Other Banking News Today
Another painful bank failure is now declared in Iowa after regulators discovered significant loan losses on its balance sheet.
The Federal Insurance Corporation (FDIC) is adding Citizens Bank in Sac City to its list of failed banks, and says Iowa Trust & Savings Bank has assumed all deposits in order to protect depositors.
The bank’s pair of physical locations will reopen as Iowa Trust & Savings Bank on Monday, reports DailyHodl.
Citizens Bank was established in 1929 and is the first bank closure in Iowa since 2011.
Its closure represents the fifth bank failure in the US this year, following the collapse of Heartland Tri-State Bank, First Republic Bank, Signature Bank and Silicon Valley Bank.
According to the Iowa Division of Banking, the bank had about $66 million in total assets and $59 million in total deposits as of September of this year.
During a joint and ongoing examination of the bank, examiners identified significant loan losses that had not previously been identified by the bank.
The bank was declared insolvent.
The bank had a concentration of out-of-territory and out-of-state loans to one industry and incurred heavy losses on some of those loans.”
Also Read: A US Bank Is Now Stealing Customers Money
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