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It wasn’t a “risky bank”.

belter 4y ago
Not according to JP Morgan... - https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/silicon-valley-bank-failure-amv.pdf https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/ins... "The liability issue: extreme reliance on institutional/VC funding rather than traditional retail deposits. ...While capital, wholesale funding and loan to deposit ratios improved for many US banks since 2008, there are exceptions. As shown in the first chart, SIVB was in a league of its own: a high level of loans plus securities as a percentage of deposits, and very low reliance on stickier retail deposits as a share of total deposits. Bottom line: SIVB carved out a distinct and riskier niche than other banks, setting itself up for large potential capital shortfalls in case of rising interest rates, deposit outflows and forced asset sales. [Note: This chart appeared in our 2023 Outlook in a discussion on risks related to deposits, rising rates and quantitative tightening]..."
capableweb 4y ago
Everything is pointing towards that it was a risky bank, with a "unusually high reliance on corporate/VC funding". Maybe SVB themselves downplayed this? Take https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/silicon-valley-bank-failure-amv.pdf https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/ins... as an example: > The liabiity issue: extreme reliance on institutional/VC funding rather than traditional retail deposits > While capital, wholesale funding and loan to deposit ratios improved for many US banks since 2008, there are exceptions. As shown in the first chart, SIVB was in a league of its own: a high level of loans plus securities as a percentage of deposits, and very low reliance on stickier retail deposits as a share of total deposits. Bottom line: SIVB carved out a distinct and riskier niche than other banks, setting itself up for large potential capital shortfalls in case of rising interest rates, deposit outflows and forced asset sales.
newaccount2023 4y ago
We have an existence proof to the contrary
JJMcJ 4y ago
Their SVB Private subsidiary, which is an ordinary consumer bank (people deposit money, bank buys bonds and writes mortgages) is still in good shape and will probably be snapped up by a bigger bank in the next few dya. For the shareholders of SVB, Patio11 of course says it best: https://twitter.com/patio11/status/1634925745515692034 https://twitter.com/patio11/status/1634925745515692034 > The sacred duty of equity is to take losses before depositors.
baq 4y ago
Oh but it was. It’s been talked about at least since December.

Not according to JP Morgan... - https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/silicon-valley-bank-failure-amv.pdf https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/ins... "The liability issue: extreme reliance on institutional/VC funding rather than traditional retail deposits. ...While capital, wholesale funding and loan to deposit ratios improved for many US banks since 2008, there are exceptions. As shown in the first chart, SIVB was in a league of its own: a high level of loans plus securities as a percentage of deposits, and very low reliance on stickier retail deposits as a share of total deposits. Bottom line: SIVB carved out a distinct and riskier niche than other banks, setting itself up for large potential capital shortfalls in case of rising interest rates, deposit outflows and forced asset sales. [Note: This chart appeared in our 2023 Outlook in a discussion on risks related to deposits, rising rates and quantitative tightening]..."

capableweb 4y ago

Everything is pointing towards that it was a risky bank, with a "unusually high reliance on corporate/VC funding". Maybe SVB themselves downplayed this? Take https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/silicon-valley-bank-failure-amv.pdf https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/ins... as an example: > The liabiity issue: extreme reliance on institutional/VC funding rather than traditional retail deposits > While capital, wholesale funding and loan to deposit ratios improved for many US banks since 2008, there are exceptions. As shown in the first chart, SIVB was in a league of its own: a high level of loans plus securities as a percentage of deposits, and very low reliance on stickier retail deposits as a share of total deposits. Bottom line: SIVB carved out a distinct and riskier niche than other banks, setting itself up for large potential capital shortfalls in case of rising interest rates, deposit outflows and forced asset sales.

newaccount2023 4y ago

We have an existence proof to the contrary

JJMcJ 4y ago

Their SVB Private subsidiary, which is an ordinary consumer bank (people deposit money, bank buys bonds and writes mortgages) is still in good shape and will probably be snapped up by a bigger bank in the next few dya. For the shareholders of SVB, Patio11 of course says it best: https://twitter.com/patio11/status/1634925745515692034 https://twitter.com/patio11/status/1634925745515692034 > The sacred duty of equity is to take losses before depositors.

baq 4y ago

Oh but it was. It’s been talked about at least since December.