U.S. banks are awash in deposits as the industry continues to lick its wounds from the 2008 crisis. The net loan to deposit ratio for all banks is just 70%, the lowest level since 1984, reports David Reilly for the WSJ.
Meanwhile, in Europe, where Greeks have been pulling money out of banks steadily since the first of the year, loan to deposit ratios are much higher, as this chart reflects.
From Zero Hedge’s vantage point,
With banks such as Danske, SHB, Swebank, DnB, and Nordea literally at 200% Loan-to-Deposits, but most other European banks too, even the tiniest outflow in deposit cash (ala what is happening in the PIIGS) will send the system into yet another liquidity spasm. Only this time, since what little unencumbered assets remaining have already been pledged to the ECB, there will be no quick LTRO collateral-type fix this time.