Big Bank Benefits of Regional Bank Failures

Following first-quarter reports of big bank earnings that exceeded expectations–and the stock market’s spotty response–strategists are in analysis mode.

Steve Sosnick, Chief Strategist at Interactive Brokers, spoke with CNN about what the large bank success indicates in the wake of regional bank failures.

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As for JPMorgan Chase’s outsize earnings report, which beat estimates by 21%, and its 7.5% surge share, Sosnick suggests the failures of the small banks sent people running to the large ones. And JPMorgan is the largest.

“They have good management. Jamie Dimon has become the face of the industry and his team benefits because of that — there are certain advantages to being the market leader. People who pulled their money from regional banks looking for safety disproportionately sent it to JPMorgan,” Sosnick told CNN.

After the collapse of Silicon Valley Bank and Signature Bank, customers shifted deposits to the big banks, who were viewed by analysts as having benefited from the disaster. Big bank executives, though, didn’t appreciate the notion.

“[These] failures were not good for banks of any size,” Dimon wrote in a letter to shareholders.

Larry Fink, Chief Executive Officer of BlackRock, said he believed the lack of trust in regional banks will increase money market investments, particularly BlackRock’s.

“Increased financing through the capital markets will require the scale, multi-asset capabilities and excellence in portfolio construction that BlackRock consistently delivers across market cycles,” Fink wrote in an earnings release.