Banks Look to Grab Their Share of Spoils From Deposit Swap Boom

A business that helped regional lenders keep large customer deposits during the industry turmoil over two years ago has been booming. Now banks want their cut.

Reciprocal deposit networks allow banks to split larger deposits across multiple lenders, so that each customer account stays below the $250,000 threshold protected by regulators. During the regional bank tumult over two years ago — where customers fled the likes of Silicon Valley Bank and First Republic en masse — reciprocal networks helped lenders retain bigger deposits, which might otherwise have headed for the doors.