Factbox-Deposit flight from U.S. regional banks raise questions about funding costs

(Reuters) – Regional banks in the United States on Monday reported deposit outflows between 3% and 11% from the prior quarter after customers sought the refuge of bigger banks in the aftermath of one of the worst banking crises.

The closure of two regional banks in March shook investor confidence and set off fears over deposit safety after small banks shed $177.5 billion in deposits in March from the previous month, according to data from the U.S. Federal Reserve.

These lenders will be compelled to lift deposit rates to lure customers, analysts worry, raising costs of one of the cheapest sources of funding.

Bank Deposits fall

Charles Schwab Corp Deposits shrank 11% in the

first quarter from the prior

quarter and 30% from the same

period a year earlier.

M&T Bank Corp Total deposits for M&T Bank

fell nearly 3% to $159.1

billion, compared with $163.5

billion at the end of the

previous quarter.

State Street Corp Deposits at State Street fell

3% to $210 billion from the

prior quarter.

(Compiled by Mehnaz Yasmin in Bengaluru; Edited by Shounak Dasgupta)