SVB Silicon Valley Bank

[harryg]

https://www.bloomberg.com/news/articles ... ck-tumbles

https://www.livemint.com/news/world/exp ... 07090.html


Bloomberg
Business
Why Is Everyone Talking About SVB? Here's Everything We Know About the Bank Right Now

By Low De Wei 10 March 2023 at 05:29 GMT

The startup world was thrown into chaos Thursday when a lender little-known outside of Silicon
Valley sparked a wave of panic in tech circles that dragged down banking shares around the
world.

Events snowballed after Silicon Valley Bank announced a share sale to shore up its finances,
following a significant loss on its portfolio. After that, things went rapidly downhill. So what does
SVB bank do and why has it sparked panic? Here's everything we know right now — and what
could happen next:

What’s happening at SVB?

Santa Clara-based SVB’s ordeal began after its parent company, SVB Financial Group,
announced that it sold $21 billion of securities from its portfolio and said it was holding a $2.25
billion share sale to shore up finances. The move was prompted by high deposit outflows at the
bank due to a broader downturn in the startup industry, analysts say. SVB also forecast a
sharper decline in net interest income.

All of that spooked a number of prominent venture capitalists, including Peter Thiel’s Founders
Fund, Coatue Management and Union Square Ventures, who, according to sources,
instructed portfolio businesses to limit exposure and pull their cash from the bank. Other VC
firms have asked portfolio companies to at least shift some of their cash away from the bank,
while a number have indicated they will stand by SVB.

What effect has it had on SVB?

SVB's stock plunged 60% Thursday and its bonds posted record declines. SVB Chief Executive
Officer Greg Becker held a conference call with the bank’s clients, including venture capital
investors, urging them to “stay calm” in a bid to avoid a run on the bank.

How did SVB’s woes spread?

SVB's problems coincided with the abrupt shutdown of Silvergate Capital Corp., with the twin
shocks sending ripples through the banking industry and pushing stocks lower. The KBW Bank
Index — a benchmark of banking stocks — sank 7.7%, the most in nearly three years.
Major US banks including Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co.
all slid at least 5%, while shares of Asian banks later followed their Wall Street peers lower.

Who are the SVB’s clients?

SVB is deeply embedded in the US startup scene, as the only publicly-traded bank focused on
Silicon Valley and tech startups. According to its website, it does business with nearly half of all
US venture capital-backed startups, and 44% of US venture-backed tech and health-care
companies that went public last year.
It lists Pinterest Inc.t, Shopify Inc. and cybersecurity firm CrowdStrike Holdings Inc. among the
bigger household names it has served.

What could happen next?

Startups withdrawing funds are on the lookout for other lenders where they can park their cash,
while investors in financial firms are closely watching other banks that may also be affected by
malaise. It’s unclear what will happen when US markets reopen. Pershing Square Holdings Ltd.
founder Bill Ackman has proposed a US government bailout to save SVB.

What's the worst-case scenario?

The worst-case scenario for any bank is that it ends up with too little cash to operate or suffers
enough losses to erode its capital, prompting regulators to sell the bank to a stronger rival or
wind it down. But SVB's stock sale should help to prevent that. Time will tell.

[SOL]

https://youtu.be/ILojoEkjmgU

[chippermon]

https://www.bloomberg.com/news/articles ... ck-tumbles

https://www.livemint.com/news/world/exp ... 07090.html


Bloomberg
Business
Why Is Everyone Talking About SVB? Here's Everything We Know About the Bank Right Now

By Low De Wei 10 March 2023 at 05:29 GMT

The startup world was thrown into chaos Thursday when a lender little-known outside of Silicon
Valley sparked a wave of panic in tech circles that dragged down banking shares around the
world.

Events snowballed after Silicon Valley Bank announced a share sale to shore up its finances,
following a significant loss on its portfolio. After that, things went rapidly downhill. So what does
SVB bank do and why has it sparked panic? Here's everything we know right now — and what
could happen next:

What’s happening at SVB?

Santa Clara-based SVB’s ordeal began after its parent company, SVB Financial Group,
announced that it sold $21 billion of securities from its portfolio and said it was holding a $2.25
billion share sale to shore up finances. The move was prompted by high deposit outflows at the
bank due to a broader downturn in the startup industry, analysts say. SVB also forecast a
sharper decline in net interest income.

All of that spooked a number of prominent venture capitalists, including Peter Thiel’s Founders
Fund, Coatue Management and Union Square Ventures, who, according to sources,
instructed portfolio businesses to limit exposure and pull their cash from the bank. Other VC
firms have asked portfolio companies to at least shift some of their cash away from the bank,
while a number have indicated they will stand by SVB.

What effect has it had on SVB?

SVB's stock plunged 60% Thursday and its bonds posted record declines. SVB Chief Executive
Officer Greg Becker held a conference call with the bank’s clients, including venture capital
investors, urging them to “stay calm” in a bid to avoid a run on the bank.

How did SVB’s woes spread?

SVB's problems coincided with the abrupt shutdown of Silvergate Capital Corp., with the twin
shocks sending ripples through the banking industry and pushing stocks lower. The KBW Bank
Index — a benchmark of banking stocks — sank 7.7%, the most in nearly three years.
Major US banks including Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co.
all slid at least 5%, while shares of Asian banks later followed their Wall Street peers lower.

Who are the SVB’s clients?

SVB is deeply embedded in the US startup scene, as the only publicly-traded bank focused on
Silicon Valley and tech startups. According to its website, it does business with nearly half of all
US venture capital-backed startups, and 44% of US venture-backed tech and health-care
companies that went public last year.
It lists Pinterest Inc.t, Shopify Inc. and cybersecurity firm CrowdStrike Holdings Inc. among the
bigger household names it has served.

What could happen next?

Startups withdrawing funds are on the lookout for other lenders where they can park their cash,
while investors in financial firms are closely watching other banks that may also be affected by
malaise. It’s unclear what will happen when US markets reopen. Pershing Square Holdings Ltd.
founder Bill Ackman has proposed a US government bailout to save SVB.

What's the worst-case scenario?

The worst-case scenario for any bank is that it ends up with too little cash to operate or suffers
enough losses to erode its capital, prompting regulators to sell the bank to a stronger rival or
wind it down. But SVB's stock sale should help to prevent that. Time will tell.

At this point I believe this to be a nothing burger. Calling for government intervention is ludicrous. Bill Ackman proposing a bailout is BS. This ain't no Lehman, not even a Bear Sterns. Tree shakers. Looking for scraps. I suppose it could be a precursor to a bit of f*ckery in the VC market, or not. I suppose money is more expensive now. That has to affect some capital intensive businesses. But still

[MarkD]

And just like that it takes the entire regional banking industry down today, including IAT and SAA (banks are a large % of the small cap universe).

https://www.proshares.com/our-etfs/leve ... nverse/saa

[buzz]

Far from a nothing burger. This is result of powell. Capital is no longer available to tech companies. They can’t raise cash to run operations. Investors can collect 5% risk free, so why put it in a risky money losing start up. This is the first of many to run out of cash and close doors.

[MarkD]

I suspect some will be sacrificed, however, politics is a powerful force as Newsom is attempting to show WBA who is the boss. Do not doubt he has an interest in protecting a friend's bank in Cali, as do the other Dems in Illinois, NY, etc. The Fed is not stupid, nor independent.

A good old fashioned bank run might be just what the doctor ordered, as long as my bank is not involved.

[chippermon]

Far from a nothing burger. This is result of powell. Capital is no longer available to tech companies. They can’t raise cash to run operations. Investors can collect 5% risk free, so why put it in a risky money losing start up. This is the first of many to run out of cash and close doors.

From what I understand, SVB problems arise from balance sheet problems. They took in a pile of vc dough and couldn’t dish it out fast enough, in the way of loans. Who knows why. To try to show some kind of profitability for their investors they foolishly invested the funds in long-term fixed rate government backed debt. At the worst time ever. Just as FFR started to rise. So to me, it might remotely have something to do with Jerome Powell but more to do with bad decisions by SVB.

SVB had deposits in 2020 of 60B. Last week it was 200B. That's quite a jump. Their cost of deposits are more than twice what most banks are. They also have twice as much assets wrapped up in fixed rate securities than other banks. Mortgage backed securities at that.

If Powell raises rates a lot more we will have a recession then maybe some other banks will be in trouble.

JP will have to accept the fact that 2% inflation is not attainable for quite some time. He will have to settle for 4% unless recession is their plan to fleece the masses.

[buzz]

SVB failed because no one wants its 1.8% once safe treasury bills. They did the right thing buying safe t bills. Powell devalued them. Good luck for anyone holding them and have to sell. Here is a good explanation https://youtu.be/vU1g7ZUQkWI

[bpcw]

SVB failed because no one wants its 1.8% once safe treasury bills. They did the right thing buying safe t bills. Powell devalued them. Good luck for anyone holding them and have to sell. Here is a good explanation

Very interesting watch, I suppose what the Fed does is not just dependant on what they should do but what their agenda is, if it's nefarious then we might not get a reverse in interest rates, perhaps we will get the plunge TI is predicting although I think we'll get a bounce of sorts first.

[Triplethought]

SVB failed because no one wants its 1.8% once safe treasury bills. They did the right thing buying safe t bills. Powell devalued them. Good luck for anyone holding them and have to sell. Here is a good explanation

Very interesting watch, I suppose what the Fed does is not just dependant on what they should do but what their agenda is, if it's nefarious then we might not get a reverse in interest rates, perhaps we will get the plunge TI is predicting although I think we'll get a bounce of sorts first.

Panic is setting in. This is what we've been expecting - that the FED continues to raise rates until something breaks and then they have to capitulate. Something just broke. And I expect stocks will take another down leg Monday. Then the Govt will scramble to soothe everyone's nerves. The question is "will it work". I think the answer is no - at least as far as what stock market will do in the next month. I cancelled a few buy orders in anticipation of juicy buys to come.

[Yodean]

My 2c:

Regional banks are susceptible - beyond all the fundamental reasons too numerous to list here - because ultimately the Fed wants there to be less small, somewhat independent banks in existence, and more power to be centralized among the big 4 (Bank of America, JPM, Citi, Wells Fargo). This makes it easier to roll out the FedCoin (CBDC) near the end of the decade, likely in '2029 or thereabouts. So if you want an allocation to the U.S. banks, stick to the big 4 and ignore the rest. Also, SVB was heavily involved with supporting tech start-ups, so SVB's demise will hurt the noob/start-up tech companies and indirectly benefit the Tech Titans in existence, by maiming potential upstart companies. Big Fish eating Small Sardines. The weak sheep will be culled.

Full disclosure: I've been accumulating a small position in BAC. Banksters always win, ultimately. Can't beat them, so will try to join them in their fleecing of the retail investor.

If you want the best, succinct explanation of what actually happened to SVB, the following clip from the time stamp is my vote from what I've seen thus far:

https://youtu.be/lSG5mF2Xb1M?t=768

The whole clip is gr8, but if you're only interested in understanding SVB, then just watch from the 13-minute mark or so.

[harryg]

What a lot happened in such a short time.

FED/US Treasury move to safeguard 100% of deposits in SVB.

New York Signature Bank disappears overnight.

HSBC, with support of BOE, purchases UK arm of SVB for £1.


Interesting that it appears that they went bust despite being quite 'sensible' - not the usual story of opaque derivatives and so on.

[nicolas]

Also interesting is that 3 days ago, Signature was touted as 'The Last Major Bank Standing in Crypto Market'.
https://news.bitcoin.com/signature-bank ... -troubles/

Is it a coincidence? or is Operation Chokepoint 2.0 in full swing?

https://www.piratewires.com/p/crypto-choke-point

[bpcw]

My 2c:

Regional banks are susceptible - beyond all the fundamental reasons too numerous to list here - because ultimately the Fed wants there to be less small, somewhat independent banks in existence, and more power to be centralized among the big 4 (Bank of America, JPM, Citi, Wells Fargo). This makes it easier to roll out the FedCoin (CBDC) near the end of the decade, likely in '2029 or thereabouts. So if you want an allocation to the U.S. banks, stick to the big 4 and ignore the rest. Also, SVB was heavily involved with supporting tech start-ups, so SVB's demise will hurt the noob/start-up tech companies and indirectly benefit the Tech Titans in existence, by maiming potential upstart companies. Big Fish eating Small Sardines. The weak sheep will be culled.

Full disclosure: I've been accumulating a small position in BAC. Banksters always win, ultimately. Can't beat them, so will try to join them in their fleecing of the retail investor.

If you want the best, succinct explanation of what actually happened to SVB, the following clip from the time stamp is my vote from what I've seen thus far:


The whole clip is gr8, but if you're only interested in understanding SVB, then just watch from the 13-minute mark or so.

Nice video, explains things in laymen's terms, cheers Yodean!

[MarkD]

Apparently, SVB had wealthy customers, Harry/Meghan, Cuban, among them. Therefore it's no surprise at the rapid response to saving the bank.

Additionally, it's a reasonably large bank, but not one of the core 4 Fed owners.

https://imgur.com/yyoRBej

There is a way out of the CBDC mess. North Dakota has a state bank. Tennessee where I reside, and others, are evaluating the potential for state banks. One way around the Fed...the Southeast USA has 40% of the population, and growing rapidly.

https://imgur.com/EHtYhg3

I just drove from Miami to Nashville and can attest to the fact peeps are fed up with the ongoing crapola. You don't have to ask, they tell you, have in on bumper stickers and cars. A good chance a break in the action will occur. Look at the Chicago Mayor's election. Folks are getting peeved even in Democratic states.