After the collapse of SVB and Signature Bank, I decided to review our existing banking relationships and see if we are well positioned to weather another potential bank run. I also wanted to share with you the ideal number of banking relationships to have to feel safe and sound.
When I first started Financial Samurai in 2009, I recommended having three banking relationships.
- One for operations / working capital
- One for borrowing
- One for investing
Back in 2009, we were in the middle of the global financial crisis. Lehman, Bear Sterns, Washington Mutual, and a number of other financial institutions were failing. Spreading out your deposits if you had more than the FDIC-insured $250,000 per bank and ownership was a rational move.
At the time, having three banking relationships was more than enough to protect my cash. The main reason why I wanted three banking relationships was for optimization purposes.
Today, I still feel three banking relationships is the ideal number to have for those who have more than $250,000 in cash, investments, or loans. For those with less than $250,000 in assets or liabilities, I’d go with at least two banking relationships and work your way up to three.