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BRICS: $517 Billion in unrealized losses hits US banking system

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While the BRICS alliance is strengthening its banking system, the US seems to be on a downhill. In the last three years alone, 15 US banks collapsed renewing fears of financial instability across the homeland. Banks such as the Republic First Bank, Citizens Bank, First Republic Bank, Signature Bank, Silicon Valley Bank, and First State Bank, among others, collapsed in the last three years.

The Federal Deposit Insurance Corporation (FDIC) published the latest report that the US banking system is looking at an unrealized loss of $517 billion. The FDIC also stated that US 63 lenders are currently on the brink of insolvency. The banks are now saddled with more than half a trillion dollars on the balance sheets in their papers. The development shows that the US banks are at risk while the central banks of BRICS are massively accumulating gold.

While the unrealized losses are only on the balance sheets, they could become a liability when the banks require liquidity. The number of lenders on its Problem Bank List rose significantly last quarter, reported FDIC. This puts the US banking system under pressure as BRICS is dumping US treasuries and the dollar.

In the last seven months alone, BRICS member China has sold $72 billion worth of US treasuries. The BRICS alliance is also spearheading the de-dollarization movement by convincing developing countries to end reliance on the dollar. Read here to know how many sectors in the US will be affected if BRICS ditches the dollar for trade.

“The number of banks on the Problem Bank List, those with a CAMELS composite rating of ‘4’ or ‘5’ increased from 52 in fourth quarter 2023 to 63 in first quarter 2024. The number of problem banks represented 1.4% of total banks, which was within the normal range for non-crisis periods of 1% to 2% of all banks. Total assets held by problem banks increased $15.8 billion to $82.1 billion during the quarter,” read the FDIC report.

“These issues could cause credit quality, earnings, and liquidity challenges for the industry. In addition, deterioration in certain loan portfolios, particularly office properties and credit card loans, continues to warrant monitoring. These issues, together with funding and margin pressures, will remain matters of ongoing supervisory attention by the FDIC,” they summed it up.

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