Commissar SFLUFAN Posted March 10, 2023 Share Posted March 10, 2023 I'll answer your question right off the bat: this is absolutely not crypto-related. Silicon Valley Bank Financial in talks to sell itself after attempts to raise capital have failed, sources say WWW.CNBC.COM Quote Shares of SVB Financial Group known as Silicon Valley Bank, tumbled for a second day Friday and weighed on the entire banking sector again on concern that more banks would incur heavy losses on their bond portfolios. SVB’s CEO Greg Becker held a call with clients Thursday afternoon to calm their fears after a 60% tumble in the stock, CNBC has learned. The shares were down another 62% in premarket trading Friday. Shares were halted in premarket trading for news pending. The SPDR S&P Regional Banking ETF was off another 2% Friday in premarket trading following an 8% tumble on Thursday. The Financial Select SPDR Fund was down by 0.3% following a 4% decline on Thursday. Signature Bank which is known to cater to the crypto sector, was off 9% in premarket trading following a 12% tumble Thursday. First Republic Bank was off 19% following a 17% tumble on Thursday. Major banks were mostly flat with JPMorgan Chase up 0.2% early Friday after tumbling 5% on Thursday. “Current pressures facing SIVB are highly idiosyncratic and should not be viewed as a read-across to other banks,” wrote analysts Manan Gosalia and Betsy Graseck with Morgan Stanley in a note Friday. 1 Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 Venture capitalists urge startups to withdraw funds from crisis-laden Silicon Valley Bank WWW.CNBC.COM VC firms are urging their portfolio companies to move money out of embattled lender Silicon Valley Bank, fueling fears of a run on the tech-focused bank. Quote Venture capital firms on both sides of the Atlantic have been urging their portfolio companies to move money out of embattled lender Silicon Valley Bank, deepening fears of a run on the tech-focused bank. Silicon Valley Bank shares plunged 60% Thursday after disclosing that it needed to shore up its capital with a $2.25 billion equity raise from investors including General Atlantic. The company’s stock was down another 60% in premarket trading Friday. SVB is a major bank in the technology startup space, having developed relationships with the VC community over its four decade existence. Providing traditional banking services while also funding tech projects, it is considered a backbone of the venture capital industry in the U.S. Numerous VC funds, including major players like Founders Fund, Union Square Ventures and Coatue Management, have advised companies in their portfolios to move their funds out of SVB to avoid the risk of being caught up in the potential failure of the bank. Having funds frozen at SVB could be deadly for a money-burning startup, according to founders with accounts at the bank who spoke to CNBC on the condition of anonymity. Quote Link to comment Share on other sites More sharing options...
Jason Posted March 10, 2023 Share Posted March 10, 2023 50 minutes ago, Commissar SFLUFAN said: I'll answer your question right off the bat: this is absolutely not crypto-related. Normal hookers and blow stuff? Casualties of Jerome's Jihad? Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 Just now, Jason said: Casualties of Jerome's Jihad? Quote SVB said in a letter Wednesday that it sold “substantially all” of its available-for-sale securities made up of mostly U.S. Treasurys. The bank also previously reported more than $90 billion in held-to-maturity securities, which wouldn’t necessarily incur losses unless it was forced to sell them before maturity to cover fleeing deposits. As the Federal Reserve consistently raises interest rates, it is lowering the value of Treasuries. For example, the iShares 20+ Treasury Bond ETF, which is made up of longer maturity Treasuries, is down 24% in the last 12 months. SVB sold its Treasury holdings at a significant loss to raise capital because their value had declined as interest rates increased. Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 The bank has been closed by the California Department of Financial Protection and Innovation and the FDIC has been appointed as receiver, with all insured deposits transferred to a newly-created FDIC entity, the Deposit Insurance National Bank of Santa Clara: FDIC: PR-16-2023 3/10/2023 WWW.FDIC.GOV FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California Quote Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank. All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors. Quote Link to comment Share on other sites More sharing options...
Guest Posted March 10, 2023 Share Posted March 10, 2023 Bank failures are always fascinating Quote Link to comment Share on other sites More sharing options...
Kal-El814 Posted March 10, 2023 Share Posted March 10, 2023 Every time I play a Civilization game, discover banking, and get rich with absolutely no downsides, I laugh and laugh and laugh. 1 3 1 Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 Just now, sblfilms said: Bank failures are always fascinating Oh yeah - definitely one of my "favorite" financial calamities! Quote Link to comment Share on other sites More sharing options...
Jwheel86 Posted March 10, 2023 Share Posted March 10, 2023 eli5 why bonds go down when interest rates go up. Quote Link to comment Share on other sites More sharing options...
chakoo Posted March 10, 2023 Share Posted March 10, 2023 Man the panic and how quickly this all went down is kind of crazy. I sadly can see a few startups/companies closing up over this if they had any capital in SVB. Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 13 minutes ago, Jwheel86 said: eli5 why bonds go down when interest rates go up. Those bonds were issued with a lower coupon rate than newer bonds issued with the higher interest rate, so they're not worth as much. Quote Link to comment Share on other sites More sharing options...
Guest Posted March 10, 2023 Share Posted March 10, 2023 13 minutes ago, Jwheel86 said: eli5 why bonds go down when interest rates go up. The bonds are issued with a fixed rate and maturity date, so the return is set in stone. If interest rates go up in the market, new bonds will have a higher yield. This makes the relative value of the old bonds go down. Quote Link to comment Share on other sites More sharing options...
Jwheel86 Posted March 10, 2023 Share Posted March 10, 2023 The floating value of something that has a fixed value... is confusing. Quote Link to comment Share on other sites More sharing options...
Chris- Posted March 10, 2023 Share Posted March 10, 2023 Just now, Jwheel86 said: The floating value of something that has a fixed value... is confusing. Just wait until you factor in the time value, then you’re in for a real treat! Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 30 minutes ago, Jwheel86 said: The floating value of something that has a fixed value... is confusing. 28 minutes ago, Chris- said: Just wait until you factor in the time value, then you’re in for a real treat! Bond Valuation Formula & Steps | How to Calculate Bond Value - Video & Lesson Transcript | Study.com STUDY.COM Learn about bond valuation. Discover the bond value formula, work through examples of how to value a bond, and identify the importance of bond... 1 Quote Link to comment Share on other sites More sharing options...
Chris- Posted March 10, 2023 Share Posted March 10, 2023 Nope, had my full share of that nonsense in Financial Management I; ain’t touching it ever again. No way no how. 1 Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 This is a fantastic substack post about this situation specifically and the "interest rate risk" that banks are carrying generally: The Demise of Silicon Valley Bank - by Marc Rubinstein WWW.NETINTEREST.CO The Rapid Collapse of the 16th Largest Bank in America Quote Link to comment Share on other sites More sharing options...
b_m_b_m_b_m Posted March 10, 2023 Share Posted March 10, 2023 Lmao i got an email from a bougie toy store that got my contact info from when I visited there a few months ago and let everyone know most of their cash was there, but moving forward they money is going into a Chase account. to spur sales this weekend (and I assume have the cash to pay employees) they have decided to go with a 40% off discount code BANKRUN so if you want some kids toys from camp.com go for it folks 1 Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 The OP for this topic on ResetERA just posted that the company he works for might not exist by the end of the day because of this bank failure. I'm guessing he works for one of those depositors mentioned below: Quote The problem at Silicon Valley Bank is compounded by its relatively concentrated customer base. In its niche, its customers all know each other. And Silicon Valley Bank doesn’t have that many of them. As at the end of 2022, it had 37,466 deposit customers, each holding in excess of $250,000 per account. Great for referrals when business is booming, such concentration can magnify a feedback loop when conditions reverse. The $250,000 threshold is in fact highly relevant. It represents the limit for deposit insurance. In aggregate those customers with balances greater than this account for $157 billion of Silicon Valley Bank’s deposit base, holding an average of $4.2 million on account each. The bank does have another 106,420 customers whose accounts are fully insured but they only control $4.8 billion of deposits. Compared with more consumer-oriented banks, Silicon Valley’s deposit base skews very heavily towards uninsured deposits. Out of its total $173 billion deposits at end 2022, $152 billion are uninsured. 1 Quote Link to comment Share on other sites More sharing options...
CitizenVectron Posted March 10, 2023 Share Posted March 10, 2023 Call me crazy, but it seems like maybe our world/society would be better off if you could only buy and sell things and services (including stakesstocks in the companies that provide them)...and not any other financial instruments that effective bet one way or the other on what those first level of things will do (and so on). 1 Quote Link to comment Share on other sites More sharing options...
b_m_b_m_b_m Posted March 10, 2023 Share Posted March 10, 2023 2 minutes ago, CitizenVectron said: Call me crazy, but it seems like maybe our world/society would be better off if you could only buy and sell things and services (including stakesstocks in the companies that provide them)...and not any other financial instruments that effective bet one way or the other on what those first level of things will do (and so on). This destroys the agriculture industry, at minimum. Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 4 minutes ago, CitizenVectron said: Call me crazy, but it seems like maybe our world/society would be better off if you could only buy and sell things and services (including stakesstocks in the companies that provide them)...and not any other financial instruments that effective bet one way or the other on what those first level of things will do (and so on). There were no "bets" involved in this situation at all - it's not the result of derivative-based instruments going sideways. This was a liquidity/solvency issue caused by a timing mismatch between the composition of the bank's deposits and the Treasury-based bonds (which are as close to a guaranteed safe investment as you're going to get) used to shore up the bank's liquidity reserves. Quote Link to comment Share on other sites More sharing options...
chakoo Posted March 10, 2023 Share Posted March 10, 2023 8 minutes ago, Commissar SFLUFAN said: The OP for this topic on ResetERA just posted that the company he works for might not exist by the end of the day because of this bank failure. I'm guessing he works for one of those depositors mentioned below: Yeah I saw that earlier today. Sadly his won't be the only one. Looks like other banks are getting hit over this. =/ Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 2 minutes ago, chakoo said: Yeah I saw that earlier today. Sadly his won't be the only one. Looks like other banks are getting hit over this. =/ More posters are saying that their companies have told them that there might be delays for the next payroll. 1 Quote Link to comment Share on other sites More sharing options...
Comet Posted March 10, 2023 Share Posted March 10, 2023 My friend just confirmed that his company ran their payroll through SVB and now they're temporarily fucked. They claim they can get their money back and it'll be business as usual but I already asked him to send me his resume so I can get him into my place... Quote Link to comment Share on other sites More sharing options...
Guest Posted March 10, 2023 Share Posted March 10, 2023 4 minutes ago, Commissar SFLUFAN said: There were no "bets" involved in this situation at all - it's not the result of derivative-based instruments going sideways. This was a liquidity/solvency issue caused by a timing mismatch between the composition of the bank's deposits and the Treasury-based bonds (which are as close to a guaranteed safe investment as you're going to get) used to shore up the bank's liquidity reserves. Yeah, unless further shenanigans are revealed, this bank failure happened in one of the more conservative ways possible. Makes it even more fascinating IMO Quote Link to comment Share on other sites More sharing options...
chakoo Posted March 10, 2023 Share Posted March 10, 2023 17 minutes ago, b_m_b_m_b_m said: Lmao i got an email from a bougie toy store that got my contact info from when I visited there a few months ago and let everyone know most of their cash was there, but moving forward they money is going into a Chase account. to spur sales this weekend (and I assume have the cash to pay employees) they have decided to go with a 40% off discount code BANKRUN so if you want some kids toys from camp.com go for it folks I just checked their site, their ad pop-up is quite funny. 1 1 Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 How are things on your end @rc0101? Quote Link to comment Share on other sites More sharing options...
Jwheel86 Posted March 10, 2023 Share Posted March 10, 2023 Tech Bros are calling for a bail out. 1 1 Quote Link to comment Share on other sites More sharing options...
GeneticBlueprint Posted March 10, 2023 Share Posted March 10, 2023 “The name of the stock, John, is Silicon Valley Bank. It lends money to semi-homeless software engineers who repay their loans with money they finesse from VCs” Stolen from the bird site 1 Quote Link to comment Share on other sites More sharing options...
GeneticBlueprint Posted March 10, 2023 Share Posted March 10, 2023 21 minutes ago, Jwheel86 said: Tech Bros are calling for a bail out. 1 Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 20 minutes ago, Jwheel86 said: Tech Bros are calling for a bail out. Yes, I saw that sentiment from Larry Summers as well In this case, I am more sympathetic to the notion that the Feds should at least ensure that even the uninsured depositors can make payroll, if nothing else. Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 Quote About 20 minutes ago, Roku filed an 8-K in which it informed investors that “approximately $487 million” or 26% of its cash and cash equivalents balance (~$1.962B), is deposited with SVB. “The company’s deposits with SVB are largely uninsured.” 3 1 Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted March 10, 2023 Author Share Posted March 10, 2023 I do have one question for these companies that had such large volumes of cash just chilling in bank accounts: Why -- pray tell -- are you holding on to so much cash, the most unproductive asset possible? Quote Link to comment Share on other sites More sharing options...
Joe Posted March 10, 2023 Share Posted March 10, 2023 My company might be affected by this. Greatttttt. 1 Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.