Mr Cooper Group Inc (COOP)

[CBA09]

cura asada - $ 220B reduction - non operating deposits

Banks, pre 2008 crisis, were mainly managing asset to liability. But since then new liquidity regulations were put forth, specifically the focal point was to ensure protection against a run on bank deposits.

What transpired was a new threshold emphasizing types of deposits and deposit mix. This new regulation to classify deposits into operating vs. non operating.

The short of it - banks have to protect against the non operating with highly liquid assets which are not favorable because they inherently have a low yield. So, today banks are focused on deposit mix with the goal to have minimal non-operating deposit vs operating deposits. Operating deposits are those that have a longer than 30 day maturity which banks can then leverage toward higher yielding assets.

This $ 220 reduction of non operating deposits was in my opinion JPM lowering their liquidity risks in the normal course of managing the deposit mix.