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the Saudis had close to 10% whether that was senior debt or shares of both
interesting to see if the Saudis had existing exposure to UBS ,
the Saudis had close to 10% whether that was senior debt or shares of bothEvidently, the Saudis had money in the headstock and not AT1 stuff.
So, who's the bitch?
MickSVB’s Loans to Insiders Tripled to $219 Million Before It Failed
- Loans to officers, directors the highest in two decades
- The bank’s weaknesses came to light as the loans surged
As Silicon Valley Bank deteriorated late last year and regulators began internally flagging flaws in its risk management, the lender opened up the credit spigot to one group: insiders.
Loans to officers, directors and principal shareholders, and their related interests, more than tripled from the third quarter last year to $219 million in the final three months of 2022, according to government data.
That’s a record dollar amount of loans issued to insiders, going back at least two decades.
The surge in loans to high-up figures may draw scrutiny as the Federal Reserve and Congress investigate the breakdown of Silicon Valley Bank, the biggest US bank collapse in more than a decade. The firm — one of three US lenders to fall this month — collapsed after investors and depositors tried to pull $42 billion in a single day and it failed to raise capital to shore up its finances.
The government reports don’t disclose loan recipients or their purpose, and there have been no allegations of wrongdoing connected to the insider loans.
The Fed takes enforcement action, or refers violations to other regulators, if it finds problems with these loans, said a spokesperson for the central bank, which oversaw SVB before its collapse. A representative for the Federal Deposit Insurance Corp., the receiver for the bank, didn’t respond to a request for comment.
Before regulators seized Silicon Valley Bank on March 10, it had a reputation as the go-to lender for tech companies and the venture capital firms that seeded them. The Fed’s interest-rate hikes last year took a toll on the lender, whose liquidity was tied up in longer-term government bonds that lost value in that environment.
Under federal regulations meant to guard against banking executives getting preferential treatment, banks are only allowed to lend to insiders if they’re given terms similar to those provided to other customers. To help prevent conflicts, regulators require banks to publicly disclose the number of such loans and their value.
In its most-recent proxy statement, SVB Financial Group, the parent company of Silicon Valley Bank before its collapse, said it made loans last year to related parties including “companies in which certain of our directors or their affiliated venture funds are beneficial owners of 10% or more of the equity securities of such companies.”
The bank issued the loans in the normal course of business, and with similar interest rates and collateral as other customers received around the same time, according to the filing. Still, loans in other categories such as real estate and commercial grew at a much slower rate — just over 3% — than those issued to insiders, according to data in separate government reports.
Rate Risks
The loans to executives and other senior figures surged as the bank’s weaknesses came to light.
Late last year, Fed examiners identified a critical problem: the bank needed to improve how it tracked interest-rate risks. The firm had about $15 billion in unrealized losses at year-end on mortgage-backed securities that it loaded up when rates were lower.
Read more: The Fed Was Too Late on SVB Even Though It Saw Problem After Problem
The bank had also directed its lending business increasingly toward larger borrowers, including its private equity and venture capital clients. About 63%, or $46.8 billion, of the firm’s lending portfolio was comprised of loans to clients who received at least $20 million, according to SVB Financial Group’s annual report for 2022.
“Our loan portfolio has a credit profile different from that of most other banking companies,” the company said in the report. The firm added that “a significant portion of our loan portfolio is comprised of larger loans, which could increase the impact on us of any single borrower default.”
Nah, it was just a fluke.The sudden collapse of Silicon Valley Bank (SVB) sent shockwaves through the financial industry, triggering a chain reaction that caused the biggest US banks to lose a staggering $52 billion in just one day. As investors scrambled to make sense of the sudden turn of events, questions arose about the pre-planned stock sell-offs by the bank’s CEO and CFO, raising suspicions of insider trading. The bank’s connections to the tech sector quickly became a liability as technology stocks were hit hard during the pandemic, and the Federal Reserve’s fight against inflation and aggressive interest rate hikes added to the bank’s troubles. As the industry wonders if this is the start of a systemic issue, only time will tell what the future holds for Silicon Valley Bank and the broader financial system.
In an automated, pre-planned sell-off, the CEO, Greg Becker, offloaded a whopping $3.57 million worth of stock, while the CFO ditched $575,000 on the very same day. But what’s even more shocking is what happened next.
Just days after their sneaky move, the bank’s assets were seized by the Federal Deposit Insurance Corporation (FDIC) and the stock price plummeted from $287.42 to an incredible $39.49 in premarket trading. Talk about a close call!
But here’s where it gets really interesting. On the very same day that Becker sold his shares, he bought the same number of shares using stock options priced at $105.18 each. These options, which allowed him to buy the company’s stock at a set price, were due to expire on May 2. And get this – the transactions were made through a trust that he controls, using a trading plan that he had set up on January 26.
Is this a case of insider trading or just a savvy financial move? You be the judge.
In addition to the CEO’s daring stock sell-off, the bank’s CFO, Daniel Beck, also made a daring move just in the nick of time.
On the same day as his boss, Beck sold a whopping 2,000 shares at $287.59 per share. But before you go thinking this was some kind of insider trading, there’s a catch. Beck had set up his trading plan way back on January 24, so the sale was actually pre-planned and automated.
As it turns out, it’s not uncommon for company insiders to use such plans to execute trades when certain conditions are met, like a specific price or volume. This helps to remove any suspicion that they may be using their knowledge to beat the market. So, was this a savvy financial move or just a coincidence? You be the judge.
One thing’s for sure, though – the plot thickens at Silicon Valley Bank. Will we uncover more secrets and scandals in the days to come? Only time will tell!
Hold onto your seats, folks – this story just keeps getting wilder! There’s no suggestion of wrongdoing by either Becker or Beck, but the timing of their pre-planned stock sell-offs certainly raises some eyebrows.
the extended low interest rates was a major problem it is easy to dump ( on ) the chief exec. but how do you generate 8% ( plus ) annual returns for those in the pension fund ??something seriously wrong here ... diversification at its worst
"The chief executive of Sweden’s largest private pension fund was fired on Tuesday . .. Magnus Billing was dismissed after Alecta took 19.6 billion Swedish krona ($1.9 billion) of losses not just on SVB but also Signature Bank and First Republic Bank. In a statement, Alecta’s board said the ouster came after further discussions about the right way forward for Alecta and how trust can be restored.
"According to FactSet, Alecta was the number-five investor in SVB, the number-six investor in Signature and the number-five investor in First Republic at the end of 2022. Alecta said it’s trying to understand how the situation arose.
... Maybe the board should take up knitting classes again.
MickSince the banking crisis began making headlines at expensive media real estate, the narrative has been that deposits are fleeing the small commercial banks and flooding into the biggest banks that are perceived as too-big-to-fail and thus offer a safer venue for deposits.
Because these mega banks are the same ones that the Fed has been bailing out since the financial crisis of 2008, that narrative requires believing that our fellow Americans are dumber than a stump.
We decided to check out that narrative for ourselves. Not only is that scenario wrong, but it is so decidedly wrong, and it’s so easy to get the accurate figures, that from where we sit it looks like there might have been an agenda by someone to harm smaller banks. (Since it’s short sellers who have benefited to the tune of more than $7 billion from this misinformation, the Securities and Exchange Commission should find out who the public relations firms are who placed this erroneous information, and who paid them.)
Each Friday, at approximately 4:15 p.m., the Federal Reserve (“the Fed”) releases its H.8 report showing the assets and liabilities of commercial banks in the United States. Monthly deposit data is included going back one year, as well as deposit data for each of the last four weeks. Data is also broken down by the 25 largest banks and the approximate 4,000 small banks. Equally helpful, the folks at the St. Louis Fed make it possible to chart much of that H.8 data via its FRED charting tools. (See charts above and below.) The 25 largest banks in the U.S. lost a total of $644 billion in deposits between April 27, 2022 and April 26, 2023.
The three largest banks in the U.S., as measured by deposits, are JPMorgan Chase, Bank of America and Wells Fargo. Between April 27, 2022 and April 26, 2023, JPMorgan Chase lost $184 billion in deposits; Bank of America lost $162 billion; and Wells Fargo lost $118.7 billion, for a combined loss in deposits of $464.7 billion — representing 72 percent of the decline in deposits at the 25 largest banks. (That’s a crystal clear indication of just how dangerously concentrated banking has become in the U.S.)
The deposit losses at JPMorgan Chase, Bank of America and Wells Fargo are more than twice what the 4,000 small banks lost in total during the same period. Their combined loss in deposits was just $210 billion. (See chart below.)
Bank of America and Wells Fargo not only lost those large deposit sums on a year-over-year basis, but both banks saw deposits fall during the past five quarters, including the quarter ending March 31, 2023 when headlines were declaring that they were seeing big inflows of deposits as a result of the banking crisis. JPMorgan Chase lost deposits in each of the quarters in 2022 and then saw a small increase in deposits in the first quarter of this year – likely from all of those misleading headlines. (This information is easily obtained from the financial statements the firms file publicly with the SEC.)
To give you an idea of just how pervasive this false narrative has been about the big banks sloshing around in all those deposits fleeing the small banks, as recently as April 28 the Bloomberg columnist, John Authers, wrote a column that was syndicated to the Washington Post – likely to be read by a large number of members of Congress. In the article, Authers included this nugget:
“This summary from the Canadian firm Palos Management explains neatly why the bigger banks are still OK:
“The first quarter’s performance of the big four was consistent with a broad consensus that the big banks have capitalized on massive depositor inflows, clearly related to the well-documented liquidity stresses facing their smaller, regionally based brethren. This should come as no surprise. The panic-fueled depositor exodus from the smaller banks to the larger ‘too big to fail’ banks is simply a rational decision. Protection of capital rules.”
Why would a journalist rely on unverified deposit data from a Canadian firm when the deposit data is readily available from the banks’ own filings with the SEC as well as in the Fed’s H.8 weekly releases?
yes , but the theory is that the Fed will keep bailing out selected ones including giving those 'fair-haired banks' special deals when they gobble up fallen regional banks , the trillion dollar question is how many stressed banks will be bailed out , regardless , is that 4 or 10 , i bet a lot less than 2,400Much has been written about the flight of deposits from some of the smaller banks thus putting pressure on their viability.
However, perhaps we should also be focussing on some of the larger banks.
From Wall street on parade
Mick
The three red diamonds on that chart are the banks that have been sold off after bankruns.If the dark secrets about the U.S. banking system that federal regulators have been keeping since the financial crash of 2008 are allowed to be aired in public Congressional hearings as a result of the current banking crisis – and mainstream media will grow a backbone and cover those hearings – it could help the U.S. avoid a catastrophic financial reckoning down the road.
For years, Wall Street On Parade has been reporting that just four banks in the U.S. control more than 85 percent of all the opaque derivatives in the banking system. We have also regularly reported how federal agencies have singled out these four banks for posing systemic risk to the financial stability of the United States. We’re talking about JPMorgan Chase, Bank of America, Wells Fargo and Citigroup’s Citibank.
On March 30, we crunched the numbers from the regulatory filings made by these banks (call reports) and reported that as of December 31, 2022, these four banks held a combined $3.286 trillion in uninsured domestic deposits. (Federal deposit insurance is capped at $250,000 per depositor per bank. Uninsured deposits taking flight were a key element in the recent bank runs that led to the second, third and fourth largest bank failures in U.S. history.) As of December 31, 2022, JPMorgan Chase Bank N.A. held $2.015 trillion in deposits in domestic offices, of which $1.058 trillion were uninsured; Bank of America held $1.9 trillion in deposits in domestic offices, of which $909.26 billion were uninsured; Wells Fargo held $1.4 trillion in deposits in domestic offices, of which $721.1 billion were uninsured; and Citibank N.A. (parent, Citigroup) held $777 billion in deposits in domestic offices, of which $598.2 billion were uninsured.
We can now put that $3.286 trillion figure into sharper perspective. On May 1, the FDIC released its report on “Options for Deposit Insurance Reform.” Without mentioning that just four banks controlled $3.286 trillion of uninsured deposits at year end, the FDIC report did provide the figure of $7.7 trillion as the total of uninsured domestic deposits held by all banks at the end of 2022.
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