The collapse of Silicon Valley Bank

[Dona Ferentes]

Is there a more appropriate thread, to deal with the collapse of Silicon Valley Bank ? SVB is the second largest collapse, at > $200 billion in deposits, with only Washington Mutual in 2008 being bigger.

While there is deposit insurance, the nature of SVB being a start up and VC lender to the tech sector, means that only a small amount of deposits are covered. A key part of the tech ecosystem (ha ha), Tech used SVB to make payroll and meet running costs, it seems, so the ripple effect is going to be very interesting.

Australian venture capital companies whose portfolios of companies held accounts with SVB, include Blackbird, King River, Main Sequence, Square Peg and Airtree. Only 2.7 per cent of the bank’s overall customers held deposits of less than the guaranteed $US250,000.

Many of the bank’s venture capital customers have been failing to raise their own new funding, which has also led to a depletion of SVB’s deposit base, forcing the bank to liquidate $US21 billion in safe assets, such as low yielding US Treasuries, at a loss.

(a loss of $2 Bill, it is reported. And the recapitalisation failed)

 

[divs4ever]

Is there a more appropriate thread, to deal with the collapse of Silicon Valley Bank ? SVB is the second largest collapse, at > $200 billion in deposits, with only Washington Mutual in 2008 being bigger.

While there is deposit insurance, the nature of SVB being a start up and VC lender to the tech sector, means that only a small amount of deposits are covered. A key part of the tech ecosystem (ha ha), Tech used SVB to make payroll and meet running costs, it seems, so the ripple effect is going to be very interesting.

Australian venture capital companies whose portfolios of companies held accounts with SVB, include Blackbird, King River, Main Sequence, Square Peg and Airtree. Only 2.7 per cent of the bank’s overall customers held deposits of less than the guaranteed $US250,000.

Many of the bank’s venture capital customers have been failing to raise their own new funding, which has also led to a depletion of SVB’s deposit base, forcing the bank to liquidate $US21 billion in safe assets, such as low yielding US Treasuries, at a loss.

(a loss of $2 Bill, it is reported. And the recapitalisation failed)

interesting

the media i was reading fail to mention the bank's size , merely focusing on it's links to tech and venture capital

one will wonder if it will be discretely bailed out or since the rescue is less likely to be a vote winner in the 2024 Presidential election , let it be liquidated

is this a 'Lehman moment ' 2023 version ?

 

[divs4ever]

Moody's downgrades credit ratings on Silicon Valley Bank, SVB Financial

Moody's downgrades credit ratings on Silicon Valley Bank, SVB Financial By Reuters

Moody's downgrades credit ratings on Silicon Valley Bank, SVB Financial

www.investing.com

i suppose Moody's had little choice , but to save some credibility , certainly evokes memories of the ratings agencies during the GFC

 

[divs4ever]

Silicon Valley Bank CEO sends message to employees with 'heavy heart'

Silicon Valley Bank CEO sends message to employees with 'heavy heart' By Reuters

Silicon Valley Bank CEO sends message to employees with 'heavy heart'

www.investing.com

one might wonder if MQG has a good look at this ( acquisition opportunity )

 

[divs4ever]

CEO of failed Silicon Valley Bank no longer a director at SF Fed

https://www.investing.com/news/stoc...y-bank-no-longer-a-director-at-sf-fed-3027959

hmmmm
one might wonder what shape the SF Fed is in

what happens if Fed banks start imploding

 

[ducati916]

There will be some interesting fallout next week:



They (SVB) are far from alone in bond losses (that they don't have to mark-to-market)



All the smaller and mid-size banks are insolvent. Many of the TBTF fail banks are high risk.

Analytical prowess?


Non-existent. You also have Credit Suisse as a global bank in dire straights.

jog on
duc

 

[Knobby22]

There will be some interesting fallout next week:

View attachment 154213View attachment 154212View attachment 154211View attachment 154210

They (SVB) are far from alone in bond losses (that they don't have to mark-to-market)

View attachment 154215

All the smaller and mid-size banks are insolvent. Many of the TBTF fail banks are high risk.

Analytical prowess?
View attachment 154214

Non-existent. You also have Credit Suisse as a global bank in dire straights.

jog on
duc

Classic bank run.

 

[ducati916]

Classic bank run.

Next one already teed up:



jog on
duc

 

[Dona Ferentes]

Contagion is where you find it.... and can show up in other places both predictable and surprising.

Swedish pension fund giant Alecta oversees more than $US104 billion in assets. Just last week it revealed it had sold out of Sweden’s most conservative banks, Svenska Handelsbanken, after 71 years, and instead moved into niche US banks.

It was SVB’s fourth-biggest shareholder and also holds big stakes in the aforementioned Signature Bank and First Republic Bank, whose shares fell 34 per cent last week.

....And I'd guess the people that made that decision won't get a bonus this year.

 

[divs4ever]

Contagion is where you find it.... and can show up in other places both predictable and surprising.

Swedish pension fund giant Alecta oversees more than $US104 billion in assets. Just last week it revealed it had sold out of Sweden’s most conservative banks, Svenska Handelsbanken, after 71 years, and instead moved into niche US banks.

It was SVB’s fourth-biggest shareholder and also holds big stakes in the aforementioned Signature Bank and First Republic Bank, whose shares fell 34 per cent last week.

....And I'd guess the people that made that decision won't get a bonus this year.

i am very much more worried about contagion where i wasn't suspecting it .

now two huge banks ( C.S. and D.B. ) having extra shakes should be anticipated but 'venture capital ' implies higher risk loans what happens where the borrowers need to access more capital , including undrawn facilities ( that is the loan is fully approved but the borrower hadn't deployed all the cash yet )

also in alternate media elsewhere have been speculation on how much ( in the dollar ) is the FDIC insurance worth if there are several bank failures in a short time period

by the same token those who are super-brave might find bargains in convertible bank debt ( where you capital is redeemed in bank shares ) but one might need to be very selective ( and careful )

 

[farmerge]

i am very much more worried about contagion where i wasn't suspecting it .

now two huge banks ( C.S. and D.B. ) having extra shakes should be anticipated but 'venture capital ' implies higher risk loans what happens where the borrowers need to access more capital , including undrawn facilities ( that is the loan is fully approved but the borrower hadn't deployed all the cash yet )

also in alternate media elsewhere have been speculation on how much ( in the dollar ) is the FDIC insurance worth if there are several bank failures in a short time period

by the same token those who are super-brave might find bargains in convertible bank debt ( where you capital is redeemed in bank shares ) but one might need to be very selective ( and careful )

To take a convertable bank debt, hmmm probably very iffy. If the said bank(s) don't come good they just may end up floating downstream, never to be heard of or seen again.
Of course it could also depend on who at the top end of town has sway, or the ear of those that matter when it comes to resusitation time.

 

[divs4ever]

To take a convertable bank debt, hmmm probably very iffy. If the said bank(s) don't come good they just may end up floating downstream, never to be heard of or seen again.
Of cours it could also depend on who at the top end of town has sway of the ear of those that matter when it comes to resusitation time.

very iffy , yes i agree , but also very profitable when you get it right ( and liable to be a total loss if you get it wrong )

however buying existing securities ( rather than newly offered products ) can be bought at steep discounts

although not a bank hybrid SVWPA turned out to be very nice ( extra were bought when the market speculated SVWPA would be converted into Seven West Media shares ) instead of the end result of SVW

the big gamble with bank debt is ... will the banks be 'bailed in ' or 'bailed out' this time ( before Cyprus a bail-out was most likely )

but investing is about risk vs reward ( do i get an adequate return if i invest wisely)

 

[farmerge]

very iffy , yes i agree , but also very profitable when you get it right ( and liable to be a total loss if you get it wrong )

however buying existing securities ( rather than newly offered products ) can be bought at steep discounts

although not a bank hybrid SVWPA turned out to be very nice ( extra were bought when the market speculated SVWPA would be converted into Seven West Media shares ) instead of the end result of SVW

the big gamble with bank debt is ... will the banks be 'bailed in ' or 'bailed out' this time ( before Cyprus a bail-out was most likely )

but investing is about risk vs reward ( do i get an adequate return if i invest wisely)

This is where a crystal ball is warranted, or having a pair oc coconuts to take that gamble.

 

[divs4ever]

This is where a crystal ball is warranted, or having a pair oc coconuts to take that gamble.

i had a nice run with that stuff between 2011 and 2016 , but watched carefully what happened in Cyprus , and had accounts during 'the great building society collapse ' ( what i salvaged after all the 'consolidation' vanished in fees and charges )

time will tell if i come back for revenge ( wait until they are frickin desperate for capital , i'll remember )

 

[farmerge]

i had a nice run with that stuff between 2011 and 2016 , but watched carefully what happened in Cyprus , and had accounts during 'the great building society collapse ' ( what i salvaged after all the 'consolidation' vanished in fees and charges )

time will tell if i come back for revenge ( wait until they are frickin desperate for capital , i'll remember )

Yeah kick them where it hurts.
My great wish is being the holder/owner of a dump truck load of folding and walking into the mongrel bank I am with and then telling them you will pay me this amount of interest and it will be a changing upward figure each month.
Though I do dream on.

 

[divs4ever]

Yeah kick them where it hurts.
My great wish is being the holder/owner of a dump truck load of folding and walking into the mongrel bank I am with and then telling them you will pay me this amount of interest and it will be a changing upward figure each month.
Though I do dream on.

HAH ! i had one try to charge my fees to accept a large amount of coinage ( even when wrapped in rolls or sorted in the correct plastic bags )

dream on , i hope it comes true for you

 

[greggles]

The SVB collapse will send crypto to new lows over the next few months. The initial ripples are now being felt as revelation after revelation is coming to light.



USDC has now broken its peg and is currently trading at US$0.91. Once the company confirms the losses, watch out below.







As the true scale and impact of the SVB collapse is revealed in the coming weeks, the contagion will spread as confidence is lost and fear takes hold. It will begin this coming week and will only get worse after that. The NASDAQ is in for a rough ride.

 

[farmerge]

HAH ! i had one try to charge my fees to accept a large amount of coinage ( even when wrapped in rolls or sorted in the correct plastic bags )

dream on , i hope it comes true for you

That's where winning Lotto and being the sole winner of a massive amount would be the answer to my pipe dream.

 

[farmerge]

The SVB collapse will send crypto to new lows over the next few months. The initial ripples are now being felt as revelation after revelation is coming to light.



USDC has now broken its peg and is currently trading at US$0.91. Once the company confirms the losses, watch out below.







As the true scale and impact of the SVB collapse is revealed in the coming weeks, the contagion will spread as confidence is lost and fear takes hold. It will begin this coming week and will only get worse after that. The NASDAQ is in for a rough ride.

So that make believe currency bitcoin and mates is now apparently coming home to roost and then bite every one on the bum.

 

[divs4ever]

not just cryptos , but many speccie stocks that specialize in tech and healthcare