Sounded like it started with a slow build up. Deposits slowed withdrawals increased.
The selling of the 1.8% bonds at a loss to cover those withdrawals, as well as the issuance of new stock, is what triggered the run i think.
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OT: Stock and Investment Talk
- Thread starter RU-05
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The selling of the 1.8% bonds at a loss to cover those withdrawals, as well as the issuance of new stock, is what triggered the run i think.
I think both things can be true. They had poor risk management and the fed raised faster than expected. Many say the goal was for the fed to break something so here we are
faster than expected....what fking planet are you on? the Fed has been transparent as fk in fact, the Fed should have jumped rates 200 basis points for the first two but does so on measured basis to give managers time to allocate and adjust as much as gauge (albeit it this is a stupid approach with such minuscule increases) the economic impact.
you are actually going to argue that the cfo was not a diversity hire? see that's the problem with your side of the aisle; delusion. You are willfully blind to the reality of life and it's consequences. For the record, his cash out rules did squat for this debacle and the ceo usually knows as much about alm, liquidity, and balance sheet management as you doAnytime a female is hired then it’s a diversity hire. Hey, the CEO is a white male and he fully responsible for the operation. He changed the rules for cash out and cashed out $3.5 million before the collapse.
Silicon Valley Bank CEO sold $3.5M in shares just two weeks before collapse
Two of Silicon Valley Bank’s top chiefs dumped millions of dollars worth of stock just two weeks before the firm collapsed Friday, records show.nypost.com
ignore him, he is one of those that speaks too much showing how little he knows. It's like the mortgage brokers telling an economist whats happening in the economy or cops telling you how to guide your attorney in court.
this bank is one giant liberal agenda gone wrong. zero fks given when you hire people who failed in spectacular fashion, have little to no resume to warrant the position they're hired for based soley on who they're banging or what pronoun they use, political ideologues that use the means of subjective banking and west coast elites. zero fks given here
so then you're not to bright, no idea what you're talking about, spouting off to troll, or just plain ignorant (literal definition) pick your poison because your post was really stupid like rutgersal stupid
Goal post move. This initially started with you posting the CRFO was a diversity hire. But you posted a profile of a woman who didn’t even work in the US.
You were also unaware the CRFO position in the US had ben unfilled for most of the past year.
The diversity hire being at all a factor here is a false narrative.
for those on the board, THIS...THIS.....is what Rutgers produces as grads these days and you wonder why teir 1 companies don't hire here any longer.
So what? She was still in charge of risk for the UK and they went down too. Why do you think that position wasn't filled?? Because nobody else was stupid enough to take it.
Everything about this bank is woke/ESG, but if you think it isn't because the internet rumor was slightly wrong go for it.
SVB is the tip of the iceberg for the woke.
Settle down. Why so attacking and personal? The best parts of these threads is sharing opposing opinions and learning. What was the cause of this run if not poor risk management and rising rates? Stay way from hyperbole.
Sir I graduated from Rutgers and run one of the biggest behavioral health companies in the state. I can post an opinion, backed up my plenty of sources that you may disagree with, and we will all still be ok. I don’t agree with many of your opinions but would never once attack you personally or think less of Rutgers because you went there. Let’s try to be better
But the issue is not the diversity hire.
Perhaps the issue was in part not having someone in that position for so long.
Besides their poor risk management, they had a business that was almost all tech/startup. Their clients weren't raising as much money (deposits slowed) and were burning cash (withdrawals increased). This has been happening for awhile. They waited way too long to raise money and when they did those same clients started pulling their money causing a bank run.
Now the clients that caused the bank run want a bailout.
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Was he the CFO during the crash? I thought that was Erin Callan. She used to come on CNBC from time to time prior to that iirc.
+1
Fed really screwed this up and caused serious stress on the banking system. Sounds like politicos are stepping in this weekend and "chatting" with Powell and other Fed members.
I think raising the money on the heels of Silvergate is what caused the panic. If Silvergate didn’t happen or they raised the money way earlier they might have been able to survive despite bad risk management and capital allocation.
SVB's investment banking arm explores buying lender back, Bloomberg News reports
The managers of Silicon Valley Bank's investment banking arm, SVB Securities, are exploring ways to buy the collapsed lender back from its parent company, Bloomberg News reported on Saturday.
www.reuters.com
lol @ people trying to turn a failed bank into a political statement. So strange.
As usual some people saw problem coming
"SVB’s Balance-Sheet Time Bomb Was ‘Sitting in Plain Sight,’ Short Seller Says"
That’s according to short seller William C. Martin, who warned his Twitter followers about the balance-sheet issues for almost two months before the parent of Silicon Valley Bank blew up in the blink of an eye this week.
The tweets started on Jan. 18, the day before SVB reported earnings, when Martin’s account posted a prescient thread that began: “Investors have rightfully been fixated on $SIVB’s large exposure to the stressed venture world, with the stock down a lot. However, dig just a little deeper, and you will find a much bigger set of problems at $SIVB.”
The problems that triggered SVB Financial Group Inc.’s death spiral were hiding in plain sight in the firm’s earnings reports.
Martin said he initially started analyzing SVB out of suspicion that he’d find weakness in its book of loans to Silicon Valley startups. Instead, he realized how vulnerable the firm’s fixed-income investments had left it following a year of deep losses in the bond market.
“They had bought all these mortgages at the top of the market and were sitting on a massive unrealized loss,” he said in an interview. “And it was sitting there in plain sight. There were a number of other banks and insurance companies with similar issues, but I haven’t seen anyone anywhere near the scale of Silicon Valley Bank.”
finance.yahoo.com
"SVB’s Balance-Sheet Time Bomb Was ‘Sitting in Plain Sight,’ Short Seller Says"
That’s according to short seller William C. Martin, who warned his Twitter followers about the balance-sheet issues for almost two months before the parent of Silicon Valley Bank blew up in the blink of an eye this week.
The tweets started on Jan. 18, the day before SVB reported earnings, when Martin’s account posted a prescient thread that began: “Investors have rightfully been fixated on $SIVB’s large exposure to the stressed venture world, with the stock down a lot. However, dig just a little deeper, and you will find a much bigger set of problems at $SIVB.”
The problems that triggered SVB Financial Group Inc.’s death spiral were hiding in plain sight in the firm’s earnings reports.
Martin said he initially started analyzing SVB out of suspicion that he’d find weakness in its book of loans to Silicon Valley startups. Instead, he realized how vulnerable the firm’s fixed-income investments had left it following a year of deep losses in the bond market.
“They had bought all these mortgages at the top of the market and were sitting on a massive unrealized loss,” he said in an interview. “And it was sitting there in plain sight. There were a number of other banks and insurance companies with similar issues, but I haven’t seen anyone anywhere near the scale of Silicon Valley Bank.”
SVB’s Balance-Sheet Time Bomb Was ‘Sitting in Plain Sight,’ Short Seller Says
(Bloomberg) -- The problems that triggered SVB Financial Group Inc.’s death spiral were hiding in plain sight in the firm’s earnings reports.Most Read from BloombergUS Discusses Fund to Backstop Deposits If More Banks FailSVB Fallout Spreads Around World From London to SingaporeStartup Bank Had...
Structural shift away from easy money and debt (whole globe maxed-out).
Rebounding interest rates kicking people in the nads as they were caught-up staring at the moon (or something),
"The bank suffered big losses on Treasuries and mortgage bonds that got clobbered by the Federal Reserve’s rapid interest rate hikes, triggering concern from depositors.
“This is just the first inning,” David Knutson, head of US fixed income product Management at Schroders said in phone interview Friday. “The reality is there was surplus liquidity and business over-funded at zero costs and that is all changed. We’ve had a regime shift in costs and now these business plans are failing and their intermediaries that are levered are struggling.”
JPMorgan credit analysts also wrote in a note Friday that it may not be systemic, but it does “reflect some of the structural issues” that drove their underweight rating on regional banks."
SVB too buried in tech.
"Some of the predicaments of SVB are peculiar to that institution, especially its dangerous, concentrated dependence on the Tech space...
SVB depended too much on one sector, clearly. As the carnage spread in Tech, so too did the withdrawals from SVB customers. These once-flush individuals and firms scrambled for cash and created material stress upon SVB. But, that stress could have been manageable, except for the additional pain of the bank’s bond portfolio.
Bond prices move inversely to yield. So, as interest rate soared, bond prices collapsed. Longer-term Treasuries lost 18% in 2022, the worst year ever — and nearly doubling the losses of the second worst year ever. ..
So, as redemptions and withdrawals accelerated across the Silicon Valley region and the bank, SVB faced a fatal death spiral. To meet its obligations, the bank was compelled to sell Treasury holdings that had been crushed in value, thanks to soaring inflation. As rumors mounted and depositors got nervous, the withdrawals accelerated and, so too, did the need to sell more bonds at a loss. As such, the institution that was once revered as a pillar of Bay Area business -- collapsed within days.
A couple dozen banks in same boat as SVB
Rebounding interest rates kicking people in the nads as they were caught-up staring at the moon (or something),
"The bank suffered big losses on Treasuries and mortgage bonds that got clobbered by the Federal Reserve’s rapid interest rate hikes, triggering concern from depositors.
“This is just the first inning,” David Knutson, head of US fixed income product Management at Schroders said in phone interview Friday. “The reality is there was surplus liquidity and business over-funded at zero costs and that is all changed. We’ve had a regime shift in costs and now these business plans are failing and their intermediaries that are levered are struggling.”
JPMorgan credit analysts also wrote in a note Friday that it may not be systemic, but it does “reflect some of the structural issues” that drove their underweight rating on regional banks."
SVB too buried in tech.
"Some of the predicaments of SVB are peculiar to that institution, especially its dangerous, concentrated dependence on the Tech space...
SVB depended too much on one sector, clearly. As the carnage spread in Tech, so too did the withdrawals from SVB customers. These once-flush individuals and firms scrambled for cash and created material stress upon SVB. But, that stress could have been manageable, except for the additional pain of the bank’s bond portfolio.
Bond prices move inversely to yield. So, as interest rate soared, bond prices collapsed. Longer-term Treasuries lost 18% in 2022, the worst year ever — and nearly doubling the losses of the second worst year ever. ..
So, as redemptions and withdrawals accelerated across the Silicon Valley region and the bank, SVB faced a fatal death spiral. To meet its obligations, the bank was compelled to sell Treasury holdings that had been crushed in value, thanks to soaring inflation. As rumors mounted and depositors got nervous, the withdrawals accelerated and, so too, did the need to sell more bonds at a loss. As such, the institution that was once revered as a pillar of Bay Area business -- collapsed within days.
A couple dozen banks in same boat as SVB
At least they got their bonuses:
Silicon Valley Bank employees received bonuses hours before government takeover
The SVB employee bonuses were for work done in 2022 and had been in process days before the company's collapse, sources said.
After SVB failure, US acts to shore up banking system confidence
U.S. authorities launched emergency measures on Sunday to shore up confidence in the banking system after the failure of Silicon Valley Bank threatened to trigger a broader financial crisis.
www.reuters.com
Why would anyone want to buy this POS radioactive bank bomb? The negative media attention alone has destroyed the brand. What exactly would a buyer get other than a bunch of incompetent employees and some real estate?After SVB failure, US acts to shore up banking system confidence
U.S. authorities launched emergency measures on Sunday to shore up confidence in the banking system after the failure of Silicon Valley Bank threatened to trigger a broader financial crisis.
They had a good tech banking business. Somebody will want that.
SVB CEO Greg Becker lobbied the government to relax some Dodd-Frank provisions on regional lenders in 2015. Trump did in 2018.
When Silicon Valley Bank busted, it had assets of $220 billion. Trump's rollback lifted the "systemically important" threshold from $50 billion to $250 billion.
SVB CEO Greg Becker lobbied the government to relax some Dodd-Frank provisions on regional lenders in 2015. Trump did in 2018.
Looks like another trainwreck.
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I don't get the impression from anything I read that SVB had an unusually high number of non performing loans as of when this happened. Maybe it needs to be split among multiple banks so no one bank is exposed to a high concentration of tech loans. Their other assets seem high quality but just misallocated for short term obligations. What's needed is a more diversified deposit base and asset allocation that can meet those short term obligations and has the fortress balance sheet that has holding power for those other assets.
The bedrock of any bank is confidence, that's why you always hear terms like fortress balance sheet etc..where they try to project strength ensure that confidence and trust. No bank can handle a run.
The gov't might need to give some assurance to a buyer or buyers like they did to JPM when they swallowed Bear Stearns. Right now IMO, it's less about low quality assets on the books (as opposed to back then) and more about buttressing confidence to prevent any further run. There's no lockup period or period of time before receiving your money clauses at a bank for orderly withdrawal so confidence is extremely important to prevent runs and disorderly withdrawal of deposits.
I know the gov't might be worried about concentration of deposits in big banks but that might happen organically anyway if they don't do something to make whole the SVB deposit base and create further dominoes in regionals which may be teetering now with possibility of runs as well.
Can’t sell loans in this market, even if they are performing. Their “liquid” asset were 10 year treasuries that were not MTM. The only thing Fed did was expose the poor mgmt of svb.
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