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Ashley Webb, of Capital Economics, said: “This is the first bit of data that we have had that covers the period immediately after the concerns over the health of the global banking system following Silicon Valley Bank and the takeover of Credit Suisse. It does feel like those jitters prompted a withdrawal of funds from the banking system.”
“People didn’t want didn’t want to see a repeat of what happened with Northern Rock.”
Total UK bank deposits, including businesses and other types of bank accounts, fell by £18.1bn in March. Excluding the last three months of 2022, when the market was reeling from the mini-Budget fallout, this was the largest total withdrawal since the Bank’s dataset began in 2009.
Savers and investors pulled money out of the banking system and moved it into bonds and National Savings and Investment accounts, which both have 100pc state guarantees. By contrast, only the first £85,000 of a bank deposit is insured.
Households moved £3.5bn – the majority of the money that they withdrew from their deposits – into NS&I accounts.
Private sector holdings of gilts rose by £25.3 billion in March. This was quadruple the £6.2 billion average increase across the previous 12 months, according to Pantheon.
Part of the movement has also been driven by higher interest rates, as savers move their cash out of instant access accounts and into fixed-term deposits to chase higher rates.
But economists warned that fresh disruption in the US could trigger further withdrawals in the UK.
Mr Webb of Capital Economics said: “Definitely I think people are going to be cognisant of new developments. The news of First Republic going under might reignite things a bit.”
Separately, US officials are investigating Goldman Sachs’ role in Silicon Valley Bank’s attempt to raise funds in March before its collapse.
SVB sold a $24bn investment portfolio to Goldman at a significant loss and sought the Wall Street giant’s help in raising new capital to cover the shortfall.
However, Goldman failed to pull off the fundraising, triggering a bank run that helped push the US regional banking system into chaos.
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