5 ms·

SVBUK Taken in to Insolvency

59 points by krona 4y ago

moremetadata 4y ago
> A Bank Insolvency Procedure would mean that eligible depositors are paid out by the FSCS as quickly as possible up to the protected limit of £85,000 or up to £170,000 for joint accounts That was still £85k in the 2008 Financial Crisis. Why does the Bank of England ignore inflation when it wants? It makes Crypto safer, if it wasnt for the massive amounts of funny money aka fiat currency thats inflating crypto and then taking it down again! >If I deposit a dollar in my bank account. Do I legally own that money? Or do I have a legal contract with the bank that they’ll give me back that money? In the UK, no, the money becomes the property of the bank its been deposited with upto the £85,000 deposit protection scheme which has not gone up since the 2008 financial crisis. https://www.bankofengland.co.uk/prudential-regulation/authorisations/financial-services-compensation-scheme https://www.bankofengland.co.uk/prudential-regulation/author... Its the same in the US and other countries, the money on deposit is the property of the bank, which is why these central bank/Govt protection schemes exist in various countries. Europe has the largest banking sector in the world, bigger than the US as its been established for longer. Whats interesting with SVB is they chose to go in the opposite direction to what some call Basel 4 which others call Basel 3 or Basel 3.1. Basel 3.1 is an international banking accord which came into force on the 1st Jan 2023, which forces banks to have more money on deposit in an attempt to compensate for the viral nature of the internet and modern day communications. Todays Banks Runs are examples of the viral nature of the internet, and the US freedom of speech makes the US banking sector more vulnerable than the rest of the world when it comes to banking stability. Throw in the US mindset typified by Facebook with their slogan "Move fast and break things" and this mindset is exposing and weakening the US banking sector. Banking should be boring. It will be interesting to see what big name US tech companies have been affected by SVB besides the lessor known unicorns, but right now I'm shorting the US tech sector in general. If you are selling property in Silicon Valley and have had an offer, get the contracts signed and deal completed asap, Silicon Valley is going down.
FollowingTheDao 4y ago
Make no mistake, this bank failure is the first sign of a western capitalist and international depression. Too much liquidity followed by the hike in interest rates....works every time. From Bloomberg: “The issues at SVB have been like a cold shower and with the Fed having just countenanced the idea of faster hikes once again, the potential for a very unhappy equity market should the jobs data surprise on the upside is very real indeed,” James Athey, investment director at global investment company Abrdn, told Bloomberg. “It has always been the case that the sort of hikes we have seen from the Fed were going to cause problems somewhere,” he added.
- gitfan86 4y ago
  The plan was to cause problems in the labor market. They wanted all types of companies including startups and banks to layoff lots of workers hoping many of those workers would become desperate and take any job at any wage which would drop labor prices and also inflation due to people having less money to spend. Somehow they didn't understand that it is much easier to move money from low yield bank accounts to higher yield t-bills than to fire lots of employees and then rehire others at lower wages in an already tight labor market.
  - ISL 4y ago
    Those higher yield t-bills are a great way for banks to make money, too. SVB is a case of misreading the trend and getting caught out. I see a ton of banks offering CDs at half a percent below the matching T-bills rate....
    - gitfan86 4y ago
      SBV is a symptom of the whole SV culture over the past few years. Crypto, Over Hiring, Over paying, 100x ARR valuations, are all tied together. A frenzy of greed and incompetence took over the industry (partially due to ZIRP), it all had to come crashing down at some point. Just like in 2007 when everyone said that houses only go up in price every year. That just isn't reality.
- 4y ago
capableweb 4y ago
Saw this on the frontpage here on HN right after reading the article "Silicon Valley Bank shut down by regulators, UK arm confirms it’s a standalone independent entity" > Silicon Valley Bank UK has moved to reassure UK clients and partners it is ring-fenced from the turmoil experienced by its parent US company. > “As a reminder, Silicon Valley Bank UK is a standalone entity with its own balance sheet and governance structure. SVB has supported investors and innovators for 40 years and we have been so humbled with the consistent drum of support coming from our UK investor and founder community in last few days,” said Erin Platts, CEO and Head of EMEA. > “We appreciate that this is a concerning time for our clients so we are working tirelessly to support them and give more context,” she added. > The UK arm of the business told customers today that it operates as a standalone “independent banking institution” that is regulated and governed by the PRA in the UK. > “Silicon Valley Bank UK fully abides by the UK regulatory requirements as covered by the Financial Services Compensation Scheme and by the Financial Ombudsman Service. SVB UK, Ltd. is ring-fenced from the parent and its other subsidiaries,” the company said. https://www.altfi.com/article/10503_silicon-valley-bank-shut-down-by-regulators-uk-branch-confirms-its-a-standalone-independent-entity https://www.altfi.com/article/10503_silicon-valley-bank-shut... Guess they weren't as independent as they thought they were.
- arthur_sav 4y ago
  When they say not to panic... panic
  - ignoramous 4y ago
    In the age of social networks, there's nothing but incessant outrage and instant panic.
    - AnimalMuppet 4y ago
      "Panic moves at the speed of information." I read that on Schlock Mercenary (web comic), but the author may have stolen the idea from somewhere else.
  - victorbjorklund 4y ago
fidgewidge 4y ago
[flagged]
- deleted 4y ago
  [deleted]
- paganel 4y ago
  You’re being downvoted for no honest reason, the “Head of Financial Risk Management & Model Risk” (to quote the exact title) should do just that, i.e. assess financial risk, she/he should leave the ideological shenanigans to people who are actually paid to do just that (PR, marketing etc). In fact, there’s probably a smart play right now to short the banks whose Heads of Financial Risk departments have been more into grammar and pronouns than into assessing financial risk.
  - fidgewidge 4y ago
    Downvoted and flagged within minutes. Apparently there are plenty of HN readers who don't want others to know what SVB UK Head of Risk was doing with her time instead of managing risk. At least with SVB USA their head of risk had the decency to quit. Unfortunately I suspect your strategy would lead to you trying to short all banks. The complete loss of interest in their jobs amongst the college-educated laptop classes was a catastrophe waiting to happen.
    - decremental 4y ago
      Flagging is very often abused here as a super duper downvote by motivated bad actors.
    - cm2187 4y ago
      Or if she was a diversity hire.
  - NikolaNovak 4y ago
    I think they're being down voted for all the right reasons - a complete non sequitur to start the same old tired fight which is irrelevant to topic at hand. Yes some people believe in concepts of equality and personal freedom. Yes some people are morally offended by that. Yes people have 24hrs a day and have more than one interest, aspect, or thought on their mind. But the link contributes nothing to discussion (and on a personal note, I'm always astonished that people like op themselves have so much time, to try to throw in an ideological attack literally every chance available).
bunabhucan 4y ago
*inSolvency
drinchev 4y ago
Wow. I hope this won’t spread further. Looking at DAX, Deutsche Bank shares dropped as well as HSBC. When I first read the news, I thought about another hit for the crypto, however looking at what happens I’m a bit worried where will the avalanche reach next Monday. Stay safe folks!
- tejohnso 4y ago
  Why wouldn't events like this reinforce the value of crypto as an alternative to traditional big bank big gov't currency? It's operated in a completely different way that isn't based on debt creation.
  - dogma1138 4y ago
    Because crypto doesn’t change anything, exchanges had liquidity issues and went under in the same way as SVB did… Crypto isn’t magic its just a glorified balance sheet. And today it’s even more complicated since you need to exchange crypto for actual money so there is another layer of liquidity risk.
- cm2187 4y ago
  Both DB and HSBC have an LCR of around 130% so in theory able to sustain a bank run (depending on the magnitude - I think LCR is calibrated on a post Lehman scenario).
Erikun 4y ago
Did they suffer a run due to the name?
havkom 4y ago
Did the ”independent” SVBUK have the exakt same ”bond problem” as SVB in the US or is something else going on here?
0xDEF 4y ago
Can someone explain why so many American startups put their money on SVB? Why did VCs allow the startups they fund to put all the money in the same basket?
- capableweb 4y ago
  It's been asked and answered countless times in the submissions about SVB. Search through them.
voytec 4y ago
After Lehman Brothers filed for Chapter 11 in the US on Sep 15 2008, the UK regulators have shut down their UK branch immediately - on Sep 16. This was even before they were delisted from NYSE (Sep 17).

59 points by krona 4y ago

> A Bank Insolvency Procedure would mean that eligible depositors are paid out by the FSCS as quickly as possible up to the protected limit of £85,000 or up to £170,000 for joint accounts That was still £85k in the 2008 Financial Crisis. Why does the Bank of England ignore inflation when it wants? It makes Crypto safer, if it wasnt for the massive amounts of funny money aka fiat currency thats inflating crypto and then taking it down again! >If I deposit a dollar in my bank account. Do I legally own that money? Or do I have a legal contract with the bank that they’ll give me back that money? In the UK, no, the money becomes the property of the bank its been deposited with upto the £85,000 deposit protection scheme which has not gone up since the 2008 financial crisis. https://www.bankofengland.co.uk/prudential-regulation/authorisations/financial-services-compensation-scheme https://www.bankofengland.co.uk/prudential-regulation/author... Its the same in the US and other countries, the money on deposit is the property of the bank, which is why these central bank/Govt protection schemes exist in various countries. Europe has the largest banking sector in the world, bigger than the US as its been established for longer. Whats interesting with SVB is they chose to go in the opposite direction to what some call Basel 4 which others call Basel 3 or Basel 3.1. Basel 3.1 is an international banking accord which came into force on the 1st Jan 2023, which forces banks to have more money on deposit in an attempt to compensate for the viral nature of the internet and modern day communications. Todays Banks Runs are examples of the viral nature of the internet, and the US freedom of speech makes the US banking sector more vulnerable than the rest of the world when it comes to banking stability. Throw in the US mindset typified by Facebook with their slogan "Move fast and break things" and this mindset is exposing and weakening the US banking sector. Banking should be boring. It will be interesting to see what big name US tech companies have been affected by SVB besides the lessor known unicorns, but right now I'm shorting the US tech sector in general. If you are selling property in Silicon Valley and have had an offer, get the contracts signed and deal completed asap, Silicon Valley is going down.

FollowingTheDao 4y ago

Make no mistake, this bank failure is the first sign of a western capitalist and international depression. Too much liquidity followed by the hike in interest rates....works every time. From Bloomberg: “The issues at SVB have been like a cold shower and with the Fed having just countenanced the idea of faster hikes once again, the potential for a very unhappy equity market should the jobs data surprise on the upside is very real indeed,” James Athey, investment director at global investment company Abrdn, told Bloomberg. “It has always been the case that the sort of hikes we have seen from the Fed were going to cause problems somewhere,” he added.

gitfan86 4y ago
The plan was to cause problems in the labor market. They wanted all types of companies including startups and banks to layoff lots of workers hoping many of those workers would become desperate and take any job at any wage which would drop labor prices and also inflation due to people having less money to spend. Somehow they didn't understand that it is much easier to move money from low yield bank accounts to higher yield t-bills than to fire lots of employees and then rehire others at lower wages in an already tight labor market.
- ISL 4y ago
  Those higher yield t-bills are a great way for banks to make money, too. SVB is a case of misreading the trend and getting caught out. I see a ton of banks offering CDs at half a percent below the matching T-bills rate....
  - gitfan86 4y ago
    SBV is a symptom of the whole SV culture over the past few years. Crypto, Over Hiring, Over paying, 100x ARR valuations, are all tied together. A frenzy of greed and incompetence took over the industry (partially due to ZIRP), it all had to come crashing down at some point. Just like in 2007 when everyone said that houses only go up in price every year. That just isn't reality.
4y ago

capableweb 4y ago

Saw this on the frontpage here on HN right after reading the article "Silicon Valley Bank shut down by regulators, UK arm confirms it’s a standalone independent entity" > Silicon Valley Bank UK has moved to reassure UK clients and partners it is ring-fenced from the turmoil experienced by its parent US company. > “As a reminder, Silicon Valley Bank UK is a standalone entity with its own balance sheet and governance structure. SVB has supported investors and innovators for 40 years and we have been so humbled with the consistent drum of support coming from our UK investor and founder community in last few days,” said Erin Platts, CEO and Head of EMEA. > “We appreciate that this is a concerning time for our clients so we are working tirelessly to support them and give more context,” she added. > The UK arm of the business told customers today that it operates as a standalone “independent banking institution” that is regulated and governed by the PRA in the UK. > “Silicon Valley Bank UK fully abides by the UK regulatory requirements as covered by the Financial Services Compensation Scheme and by the Financial Ombudsman Service. SVB UK, Ltd. is ring-fenced from the parent and its other subsidiaries,” the company said. https://www.altfi.com/article/10503_silicon-valley-bank-shut-down-by-regulators-uk-branch-confirms-its-a-standalone-independent-entity https://www.altfi.com/article/10503_silicon-valley-bank-shut... Guess they weren't as independent as they thought they were.

arthur_sav 4y ago
When they say not to panic... panic
- ignoramous 4y ago
  In the age of social networks, there's nothing but incessant outrage and instant panic.
  - AnimalMuppet 4y ago
    "Panic moves at the speed of information." I read that on Schlock Mercenary (web comic), but the author may have stolen the idea from somewhere else.
- victorbjorklund 4y ago

fidgewidge 4y ago

[flagged]

deleted 4y ago
[deleted]
paganel 4y ago
You’re being downvoted for no honest reason, the “Head of Financial Risk Management & Model Risk” (to quote the exact title) should do just that, i.e. assess financial risk, she/he should leave the ideological shenanigans to people who are actually paid to do just that (PR, marketing etc). In fact, there’s probably a smart play right now to short the banks whose Heads of Financial Risk departments have been more into grammar and pronouns than into assessing financial risk.
- fidgewidge 4y ago
  Downvoted and flagged within minutes. Apparently there are plenty of HN readers who don't want others to know what SVB UK Head of Risk was doing with her time instead of managing risk. At least with SVB USA their head of risk had the decency to quit. Unfortunately I suspect your strategy would lead to you trying to short all banks. The complete loss of interest in their jobs amongst the college-educated laptop classes was a catastrophe waiting to happen.
  - decremental 4y ago
    Flagging is very often abused here as a super duper downvote by motivated bad actors.
  - cm2187 4y ago
    Or if she was a diversity hire.
- NikolaNovak 4y ago
  I think they're being down voted for all the right reasons - a complete non sequitur to start the same old tired fight which is irrelevant to topic at hand. Yes some people believe in concepts of equality and personal freedom. Yes some people are morally offended by that. Yes people have 24hrs a day and have more than one interest, aspect, or thought on their mind. But the link contributes nothing to discussion (and on a personal note, I'm always astonished that people like op themselves have so much time, to try to throw in an ideological attack literally every chance available).

bunabhucan 4y ago

*inSolvency

drinchev 4y ago

Wow. I hope this won’t spread further. Looking at DAX, Deutsche Bank shares dropped as well as HSBC. When I first read the news, I thought about another hit for the crypto, however looking at what happens I’m a bit worried where will the avalanche reach next Monday. Stay safe folks!

tejohnso 4y ago
Why wouldn't events like this reinforce the value of crypto as an alternative to traditional big bank big gov't currency? It's operated in a completely different way that isn't based on debt creation.
- dogma1138 4y ago
  Because crypto doesn’t change anything, exchanges had liquidity issues and went under in the same way as SVB did… Crypto isn’t magic its just a glorified balance sheet. And today it’s even more complicated since you need to exchange crypto for actual money so there is another layer of liquidity risk.
cm2187 4y ago
Both DB and HSBC have an LCR of around 130% so in theory able to sustain a bank run (depending on the magnitude - I think LCR is calibrated on a post Lehman scenario).

Erikun 4y ago

Did they suffer a run due to the name?

havkom 4y ago

Did the ”independent” SVBUK have the exakt same ”bond problem” as SVB in the US or is something else going on here?

0xDEF 4y ago

Can someone explain why so many American startups put their money on SVB? Why did VCs allow the startups they fund to put all the money in the same basket?

capableweb 4y ago
It's been asked and answered countless times in the submissions about SVB. Search through them.

voytec 4y ago

After Lehman Brothers filed for Chapter 11 in the US on Sep 15 2008, the UK regulators have shut down their UK branch immediately - on Sep 16. This was even before they were delisted from NYSE (Sep 17).