The FDIC is to apply a special assessment fee of 0.125% to uninsured deposits of lenders in excess of $5bn. According to the FDIC, banks with total assets over $50bn will pay more than 95% of the special assessment. No banking organisations with total assets under $5bn will be subject to what it terms the special assessment.
The FDIC estimates that 113 banks will be subject to the special assessment.
The FDIC plans to collect the special assessment of 0.125% over eight quarterly assessment periods. However, the special assessment rate is subject to change prior to any final rule. This depends on any adjustments to the loss estimate, mergers or failures, or amendments to reported estimates of uninsured deposits.
The deposit insurance fund needs topped after it was drained following recent bank failures. Specifically, Silicon Valley Bank was closed on 10 March and the FDIC was appointed receiver. Signature Bank was closed on 12 March, with the Federal Deposit Insurance Corporation also appointed as receiver.
$15.8bn: the cost of Signature and SVB failures
The FDIC estimates the SVB and Signature failures attributable to the protection of uninsured depositors will cost around $15.8bn.
“The proposal applies the special assessment to the types of banking organisations that benefitted most from the protection of uninsured depositors, while ensuring equitable, transparent, and consistent treatment based on amounts of uninsured deposits,” said FDIC Chairman Martin Gruenberg. “The proposal also promotes maintenance of liquidity. This will allow institutions to continue to meet the credit needs of the US economy.”