SVB, Silvergate Collapse Turns Spotlight on Deposit Concentration

The sudden collapses of Silicon Valley Bank and Silvergate Bank will likely drive regulators to scrutinize how current rules on banks’ customer concentration and liquidity risks can better protect smaller banks.

But the banks’ unique business models would mitigate concerns that there’s a wider crisis looming, bank industry watchers say. Their circumstances also underscore that industry risk rules aren’t crafted as catch-all solutions, particularly for institutions that are at the whim of a few clients, they say.

Both federal and state regulators “are going to look at liquidity risk, concentration in sectors, and come up with a comprehensive reason why ...