Silicon Valley bank bust, after insiders sell

[scrumpyjack]

And yet in the by & by one occasionally gets a Steve Jobs.

Regards,

Can't see Mr Apple as a banker somehow.

Shades of Bankman-Fried, very clever but a bit short on common sense and ethics maybe? Maybe half baked rather than fried?

[odysseus2000]

Fed’s shutter signature bank of New York:

https://www.cnbc.com/2023/03/12/regulat ... -risk.html

Feds are citing systemic risk, if so the potential for an emergency pivot on rates has risen rapidly.

Regards,

[odysseus2000]

And yet in the by & by one occasionally gets a Steve Jobs.

Regards,

Can't see Mr Apple as a banker somehow.

Shades of Bankman-Fried, very clever but a bit short on common sense and ethics maybe? Maybe half baked rather than fried?

We have lots of bankers, but who can name one who changed the world like Jobs did?

Regards,

[GoSeigen]

Don't believe some of the hyperbolic** stuff being posted here. This will turn out to be a non-event. Like the UK outfit loved by the HYP people that went bust around 4 years ago this time of year, I can't even remember their name now but everyone acted like the sky was falling in and six months later they were forgotten. Same here, this is an idiosyncratic failure, hopefully it will help take some more crypto-junk down with it too but I doubt the repercussions will move beyond that.

GS
(**) "Biggest shock to the system ever"? What guff!

[Gerry557]

Incredibly stupid of so many tech companies putting all their corporate funds into one relatively small bank and so not able to pay next week's wages!
These clever tech guys seem to have little common sense!

If you have ever met some of them you would know that they don't have any common sense. They are probably wandering around with odd socks on and lots of everyday tasks just don't get into their brain space.

Most are on another level and highly focus on an issue, probably very complex so putting on matching socks is just beneath them.

"He can tell you the square root of the surface area of a jar of coffee! Just don't ask him to take it off" Was a description of a new chap that started work for me.

And yet in the by & by one occasionally gets a Steve Jobs.

Regards,

I think there are quite a few in the mix that are brilliant but unseen by the general public. The young coder doing things for a game but then the code is ideal for the trip to Mars etc or better techniques in forensics.

I suppose you have to be careful about judging a book by its colour. That kid with the odd socks on might be curing cancer tomorrow.

[monabri]

New owners of the UK arm = HSBC, bought for £1.

https://www.telegraph.co.uk/business/20 ... s-economy/

[Gerry557]

As a HSBC shareholder I'm not sure if it's a quid we'll spent.

Maybe for my other holdings it might give a sense of security

[1nvest]

As a HSBC shareholder I'm not sure if it's a quid we'll spent.

Maybe for my other holdings it might give a sense of security

The risk as I understand it is that SVB had no risk manager for the prior year, and the new one observed the liquidity risk, the CEO sold all of their shares/Options and only then made the announcement - that sent SVB into a nose-dive. Smaller banks don't have to mark their bond holding to market, so deposits were covered, just not the bank-run where the bonds became liable to being sold (marked to market - after yield rises/price declines). Held to maturity and no bank-run and SVB would have been fine.

If, as I suspect HSBC can, cover withdrawals via its own liquidity channels, then its buying many bonds for £1, that if held to maturity will yield a great return for HSBC. I can't see HSBC enduring a bank-run such that it will be a good earner/reward for HSBC. In effect maybe £££billions of bonds bought for £1.

The recent HSBC share price is aligned to the rest of the market, so suggestive that the market in general doesn't see it as a bad move for HSBC. But equally not a great thing, I guess in the scale of HSBC the size/value of SVB is loose-change, such that the share price hasn't relatively outperformed either.

In having diluted the SVB risk away, the hundreds of tech companies who in effect used SVB as a depository (and were massively exposed to no cover of their deposits) will also see that risk evaporate.

The main losers will be SVB share and bond holders. Otherwise pretty much a non-event now that HSBC has bought it out.

[ursaminortaur]

As a HSBC shareholder I'm not sure if it's a quid we'll spent.

Maybe for my other holdings it might give a sense of security

The risk as I understand it is that SVB had no risk manager for the prior year, and the new one observed the liquidity risk, the CEO sold all of their shares/Options and only then made the announcement - that sent SVB into a nose-dive. Smaller banks don't have to mark their bond holding to market, so deposits were covered, just not the bank-run where the bonds became liable to being sold (marked to market - after yield rises/price declines). Held to maturity and no bank-run and SVB would have been fine.

If, as I suspect HSBC can, cover withdrawals via its own liquidity channels, then its buying many bonds for £1, that if held to maturity will yield a great return for HSBC. I can't see HSBC enduring a bank-run such that it will be a good earner/reward for HSBC. In effect maybe £££billions of bonds bought for £1.

The recent HSBC share price is aligned to the rest of the market, so suggestive that the market in general doesn't see it as a bad move for HSBC. But equally not a great thing, I guess in the scale of HSBC the size/value of SVB is loose-change, such that the share price hasn't relatively outperformed either.

In having diluted the SVB risk away, the hundreds of tech companies who in effect used SVB as a depository (and were massively exposed to no cover of their deposits) will also see that risk evaporate.

The main losers will be SVB share and bond holders. Otherwise pretty much a non-event now that HSBC has bought it out.

As I understand it HSBC has just bought the UK arm of SVB (SVB-UK) rather than SVB so I'm not sure they have bought £££billions of bonds.

https://www.reuters.com/markets/deals/hsbc-says-it-has-acquired-silicon-valley-bank-uk-2023-03-13/

SVB UK is ringfenced from the U.S. group, and HSBC said the assets and liabilities of the parent company were excluded from the transaction.

[odysseus2000]

HSBC paid £1 for the uk arm of svb:

https://www.hsbc.com/news-and-media/med ... C2%A36.7bn.

The uk share holders and bond holders of svb have lost all that they had.

What is happening to svb in the US? Some reports say it will re-open on wed, but I have no idea how unless the Fed’s are going to bail it out which Yellen said they would not.

If some one has funds in a us regional bank like svb, why would they not with draw & buy treasuries? The Fed’s guarantee investor funds only to a small level at a bank, but treasuries are guaranteed.

The probability exists that many regional bank account holders will with draw funds causing a run on the entire sector and as this contagion expands most of these regional banks will temporarily shut down to stop this mass exodus of funds creating a 2008 banking crisis. Meanwhile share holders & bond holders in regional banks will also try & get out.

If this happens what will the Fed do?

The Fed can carry on & risk a bank melt down or they can do an emergency interest rate pivot & take rates down so that banks pay out less, but likely causing inflation to spike up.

It will be interesting to see what happens. As of now the us regional bank index is down over 5%:

https://twitter.com/0_ody/status/163529 ... DCpgdbFBxg

Meanwhile there is likely panic in the white house & glee among potential candidates for the presidency, next election in 2024.

Regards,

[odysseus2000]

Very confusing chaotic action in the us. Circuit breakers have stopped many us regional bank shares from trading & Biden has said all is well:

https://www.nytimes.com/live/2023/03/13 ... alley-bank

The action of the Fed opening the window to provide emergency funds to any bank that needs it is so 2008. These funds effectively allow the banks to pay out higher interest rates adding to inflation rather than subtracting from it.

Regards,

[odysseus2000]

Bit coin & gold rally:

https://twitter.com/0_ody/status/163530 ... DCpgdbFBxg

https://twitter.com/0_ody/status/163530 ... DCpgdbFBxg

Regards,

[odysseus2000]

Ten year treasury yields fall hard:

https://twitter.com/0_ody/status/163530 ... DCpgdbFBxg

Regards,

[odysseus2000]

Bitcoin is enjoying the troubles that began at SVB:

https://twitter.com/BTC_Archive/status/ ... 09921?s=20

Regards,

[odysseus2000]

European banks in trouble:

https://www.cnbc.com/2023/03/15/europea ... nings.html

Regards,

[Tedx]

But. ..but. I thought SVB was a flash in the pan. A one off event that the Fed would nip in the bud pretty quickly.

[odysseus2000]

But. ..but. I thought SVB was a flash in the pan. A one off event that the Fed would nip in the bud pretty quickly.

Every banking crisis I have seen starts off with the authorities & the politicians saying there is no crisis.

In 2008 the Fed laughed at Cramer when he said there was a crisis & then they had to bring in a vast amounts of emergency measures to keep the banking system alive.

Things could still blow over, but this could develop into a murderous banking crisis. The idea that the authorities can guarantee every depositor is inconsistent with the size of the depositor base & the money the authorities have.

Treasuries or gilts are safe, but there are stories of banks refusing to let depositors have their cash. If so people can not escape from banks & go into safety.

Regards,

[Dod101]

European banks in trouble:

https://www.cnbc.com/2023/03/15/europea ... nings.html

Regards,

But Credit Suisse’s problems have got little or nothing to do with SVB. They have been troubled and have been relying on external support for a long while.

Dod

[Tedx]

Yeah but Cramer was a bit of a cheerleader for Bear Stearns wasnt he?

[odysseus2000]

European banks in trouble:

https://www.cnbc.com/2023/03/15/europea ... nings.html

Regards,

But Credit Suisse’s problems have got little or nothing to do with SVB. They have been troubled and have been relying on external support for a long while.

Dod

Yes, & that is what makes this situation hard to follow.

Is this just bears trying to talk the market down?

Or are there banks with assets that were bought when interest rates were low & that are now so under water that the holder can not sell them with out taking losses that impact their day to day operations?

From what I am reading, folk who are short banks like svb, are not being allowed to cover as many banks equity are suspended:

https://twitter.com/smartertrader/statu ... DCpgdbFBxg

Interesting situation!

Regards,