Stellaboz Posted March 13, 2023 Share Posted March 13, 2023 Silicon Valley Bank has gone tits up in the US, with another right behind it. Have they not learned from last time with their complex financial trades, or will the banks and governments handle this shit before it gets mental like last time? 0 Quote Link to comment Share on other sites More sharing options...
Ross. Posted March 13, 2023 Share Posted March 13, 2023 I’m surmising they expected the fed to consider this possibility before raising rates as quickly as they did. Given the governments bailed out the banking sector previously, there’s an argument to be made that this wasn’t down to bad investments, it was down to expecting the government to do the same again. 0 Quote Link to comment Share on other sites More sharing options...
djchapsticks Posted March 13, 2023 Share Posted March 13, 2023 7 minutes ago, Stellaboz said: Silicon Valley Bank has gone tits up in the US, with another right behind it. Have they not learned from last time with their complex financial trades, or will the banks and governments handle this shit before it gets mental like last time? All this 'money that is hard to come by, we'll all need to tighten our belts' will be in more plentiful supply over the next few weeks and months bailing out a few billionaires, right? 0 Quote Link to comment Share on other sites More sharing options...
coprolite Posted March 13, 2023 Share Posted March 13, 2023 The reporting i've seen suggests that this one is more a case of a single badly managed company rather than a systemic problem like 2008 was. Apparently their cash deposits grew much faster than their loan book because of the cash generative nature of their clients. I'm not at all convinced that it will be isolated and the UK has beeen at the forefront of resisting any measures to make banks more stable. If it does go tits up it will be here early again. 0 Quote Link to comment Share on other sites More sharing options...
ICTChris Posted March 13, 2023 Share Posted March 13, 2023 (edited) I don't think it's that complex. They were very over exposed to start ups - a downturn in VC funding of start ups caused their liquidity position to be exposed and there was a run. The Yanks have stepped in, all deposits up to $250k will be paid out today and once they've flogged it all off people will get some more money. Apparently, SVB had invested in a lot of long term government bonds, which have reduced in value. Also, apparently in the average bank in the US around 50% of deposits are over $250k - in SVB 93% of the accounts were more than $250k. Edited March 13, 2023 by ICTChris 3 Quote Link to comment Share on other sites More sharing options...
Molotov Posted March 13, 2023 Share Posted March 13, 2023 This is a great summary which I read over the weekend. https://noahpinion.substack.com/p/why-was-there-a-run-on-silicon-valley 1 Quote Link to comment Share on other sites More sharing options...
Molotov Posted March 13, 2023 Share Posted March 13, 2023 Good old HSBC to the rescue. Shades of Craig Whyte. £1. https://www.theguardian.com/business/2023/mar/13/hsbc-buy-silicon-valley-banks-uk-tech-startups 0 Quote Link to comment Share on other sites More sharing options...
Ross. Posted March 13, 2023 Share Posted March 13, 2023 4 minutes ago, ICTChris said: I don't think it's that complex. They were very over exposed to start ups - a downturn in VC funding of start ups caused their liquidity position to be exposed and there was a run. The Yanks have stepped in, all deposits up to $250k will be paid out today and once they've flogged it all off people will get some more money. A big part of it, but from what I have read the significant majority of their clients were holding more than the 250k that will be covered. They had invested huge amounts of their cash reserves in long dated US treasury bonds. Interest rates going up quickly means bond prices dropping quickly. That certainly didn’t help them. 1 Quote Link to comment Share on other sites More sharing options...
Ross. Posted March 13, 2023 Share Posted March 13, 2023 6 minutes ago, Molotov said: This is a great summary which I read over the weekend. https://noahpinion.substack.com/p/why-was-there-a-run-on-silicon-valley Yeah, this covers most of what I read over the weekend. 0 Quote Link to comment Share on other sites More sharing options...
ICTChris Posted March 13, 2023 Share Posted March 13, 2023 Just now, Ross. said: A big part of it, but from what I have read the significant majority of their clients were holding more than the 250k that will be covered. They had invested huge amounts of their cash reserves in long dated US treasury bonds. Interest rates going up quickly means bond prices dropping quickly. That certainly didn’t help them. I just edited to add pretty much exactly that to my post 1 Quote Link to comment Share on other sites More sharing options...
ICTChris Posted March 13, 2023 Share Posted March 13, 2023 In the 1980s and 1990s an average of one bank a day went bust in the US. Since 2000 it's been one a week. 1 Quote Link to comment Share on other sites More sharing options...
Ross. Posted March 13, 2023 Share Posted March 13, 2023 2 minutes ago, ICTChris said: I just edited to add pretty much exactly that to my post They won’t be the only ones suffering as a result of the bond prices dropping. Whether or not others are affected this badly remains to be seen. Most major banks are now far better placed to deal with this shit than they were in 2008, worst case scenario is a few smaller names going tits up and some others ripping what they can from the carcass on the cheap. 0 Quote Link to comment Share on other sites More sharing options...
ICTChris Posted March 13, 2023 Share Posted March 13, 2023 This is just rookie, boring shit compared to FTX and SBF. Where's the polycules of nerds all high on speed, playing World of Warcraft and fucking each other while losing $10bn a day? Amateurs. 4 Quote Link to comment Share on other sites More sharing options...
coprolite Posted March 13, 2023 Share Posted March 13, 2023 This isn’t my area so the following might be a load of bollocks. This isn’t a straight up repeat of Lehman and Northern Rock. It’s not retail deposits that there was a run on but large corporates. While there is a similarity in that there’s a mis match between illiquid lending and short deposits, the mis match seems to have been driven more by having too many deposits and not by chasing low quality borrowers. In 2008 it was already clear that there could never be enough liquidity in the system to cope if people started calling in CDOs. Since then there’s been an upward trend in companies holding cash instead of investing it or paying it out. Something like $6trn before Covid in total. Lots of this is held by US multinationals overseas, including in their favoured supine regional head office territories (I.e. Singapore on Thames). My worry is the increased risk caused simply by the increased figures. If Apple or Microsoft blink first and decide that they need to repatriate their hoard (and swallow the associated tax expense), then I think we could see contagion. 1 Quote Link to comment Share on other sites More sharing options...
AngusTheBull Posted March 13, 2023 Share Posted March 13, 2023 I see their CEO sold nearly $4m worth of stock under two weeks ago. That seems rather fortunate timing… HSBC are getting a slightly better deal for their £1 than Craig Whyte did. 0 Quote Link to comment Share on other sites More sharing options...
hk blues Posted March 13, 2023 Share Posted March 13, 2023 31 minutes ago, AngusTheBull said: I see their CEO sold nearly $4m worth of stock under two weeks ago. That seems rather fortunate timing… HSBC are getting a slightly better deal for their £1 than Craig Whyte did. I'm pretty sure the issues facing them would have been evident back then so no surprise. I suppose the legality of the stock sale would hinge on whether they acted on information only a limited number of people were privy to. 0 Quote Link to comment Share on other sites More sharing options...
Melanius Mullarkey Posted March 13, 2023 Share Posted March 13, 2023 It’s almost as if the finance sector consists of shysters or clueless c***s. 0 Quote Link to comment Share on other sites More sharing options...
Ross. Posted March 13, 2023 Share Posted March 13, 2023 46 minutes ago, AngusTheBull said: I see their CEO sold nearly $4m worth of stock under two weeks ago. That seems rather fortunate timing… HSBC are getting a slightly better deal for their £1 than Craig Whyte did. If there’s anything dodgy about it they will nail him on it. Most likely he had stock options from previous bonuses which vested and he punted at the earliest possible opportunity. Most CEO’s will do the same as a means of risk management. 0 Quote Link to comment Share on other sites More sharing options...
Ross. Posted March 13, 2023 Share Posted March 13, 2023 5 minutes ago, Melanius Mullarkay said: It’s almost as if the finance sector consists of shysters or clueless c***s. Fairly well paid shysters and clueless c***s, thanks. 0 Quote Link to comment Share on other sites More sharing options...
Melanius Mullarkey Posted March 13, 2023 Share Posted March 13, 2023 28 minutes ago, Ross. said: Fairly well paid shysters and clueless c***s, thanks. Which are you then? Don’t answer that btw. 0 Quote Link to comment Share on other sites More sharing options...
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