Is Bank of America at risk of losing its status as the biggest bank by U.S. deposits? Findings in a new report raise that question.
New York-based JPMorgan Chase & Co. has nearly closed the deposit gap with Charlotte’s Bank of America, according to an analysis this month by S&P Global Market Intelligence. The S&P findings are based on the Federal Deposit Insurance Corp.’s latest annual bank-deposit figures, released in late September.
JPMorgan, already the nation’s largest bank by assets, had $1.21 trillion in U.S. deposits as of the end of June, an increase of about 8 percent from a year earlier. Bank of America boosted its deposits by about 3 percent to $1.22 trillion, keeping it ahead of JPMorgan by about $7 billion. The data is based on retail and other deposit types.
The S&P report does not discuss specific reasons for Bank of America’s loss of U.S. market share. A spokesperson for the bank, the second-largest U.S. bank by assets, declined to comment.
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In 2011, JPMorgan overtook Bank of America to be the largest U.S. bank by assets. But Bank of America’s large deposit base has remained a point of pride for the company, a status it has repeatedly touted to investors.
According to S&P, Bank of America has been in first place for U.S. deposits since at least 1990.
“We have the No. 1 market share in U.S. retail deposits,” Chief Financial Officer Paul Donofrio said during a May conference in London.
JPMorgan and Bank of America have varying strategies that have resulted in JPMorgan growing deposits faster, S&P told the Observer but did not provide details.
In its report, S&P noted that JPMorgan’s CEO of consumer and community bank, speaking at a conference last month, cited customer retention as a key factor in consistent deposit growth since 2012. S&P also credited recent acquisitions at Winston-Salem’s BB&T and New York’s Goldman Sachs Group as helping boost deposits at those banks.
Bank of America and New York-based Citigroup have also been selling branches, and the customer deposits that go with them, in recent years.
S&P declined to speculate on whether JPMorgan will overtake Bank of America. Bank of America’s U.S. deposits market share of 10.85 percent compares with 10.79 percent at JPMorgan, a gap that has been narrowing between the two banks over the years.
The slippage at Bank of America also comes as U.S. banks have felt pressure from regulators over certain deposits.
Last year, The Wall Street Journal reported that some banks, including JPMorgan, have taken steps to shed large-dollar deposits deemed risky by regulators. Citing people familiar with the matter, the WSJ reported that Bank of America told some institutional clients they will need to move their deposits or pay to keep them at the bank.
In its second-quarter earnings report, Bank of America said deposits rose from a year earlier in all of its business segments except global markets, which offers sales and trading services to institutional clients.