Review after a year

After one and a half year, TARP's money has brought a profit.

A year ago, this was the situations of Citibank, JP Morgan, BoA, and Wells Fargo. The numbers are not easy to attain or to watch, yet once it's on graph, it's not difficult to see Citi was in a big problem.

From left to right: Citi, BoA, JP Morgan, Wells Fargo, and Peer group

(Non-core funding dependence measures the degree to which the bank is funding longer-term assets (loans, securities that mature in more than one year, etc.) with non-core funding. Non-core funding includes funding that can be very sensitive to changes in interest rates such as brokered deposits .

the difference between non-core liabilities and short-term investments, divided by long-term assets.)

American banks' liquidity ratios

American banks like Wells Fargo, Citigroup, JP Morgan are posting positive profit. Below are some of my findings in the thesis about Bank Liquidity Risk Management. Looking at the ratios of WFC back in September 2008, there could be a rational hope that WFC would be doing well.

Graphs were drawn based on figures from the Board of Governor of the Federal Reserve taken from November 2008.


Core deposit on the balance sheet of Citigroup has been very low since 2005 yet there was only problem to be seen when it came to the instability in the market.



Liquid assets comprises of trading assets, securities and papers, which could also explain one of the main sources of income in JP Morgan, Citi... who are active in buying and selling these papers.



The gap between the red and blue columns can be a measure in liquidity risk. And look at the red column, net loans and leases over core deposits of Citi!

(Non-core funding dependece = non-core liabilities - short-term investments/ long-term assets)

Again, Citi with a very high non-core funding dependence, the ratio to measure the degree to which banks fund long-term assets with non-core funding.