Market News

Silicon Valley Bank’s Loss is Bank of America’s Gain

There are those that say money is like energy. It cannot be created or destroyed, only transferred. That might be a fundamental misunderstanding in terms, but it did turn out to work in one case. When Silicon Valley Bank (NASDAQ:SIVB) collapsed, one bank reaped a massive slug of benefits. This bank was none other than Bank of America (NYSE:BAC). Though it brought in a big new pile of cash, investors are less than pleased as the bank stock is down slightly in Wednesday afternoon trading.

A Bloomberg report revealed that Bank of America attracted $15 billion, as collapsed banks saw cash depart from them and flow into its coffers instead. Bank of America representatives wouldn’t speak about the topic, for their part, so the documents Bloomberg cited would need to stand on their own merits.

Since Bank of America is the U.S.’ second largest bank, it’s reasonable to see why customers would flee to it, presuming safety in numbers. Nevertheless, the underlying macroeconomic environment remains about as uncertain as it gets. Indeed, bank failures don’t just happen every day, after all. Still, the influx of cash means that Bank of America isn’t being threatened by the risk of a run on the bank.

Overall, analyst consensus calls Bank of America stock a Moderate Buy with an average price target of $39.87 per share, which implies 41.66% upside potential.


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