13 ms·

Are bidders expected to forget or "un-see" such knowledge afterwards? Or is the information not that detailed / anonymized in some way?

drexlspivey 4y ago
Why would they need to un-see it?
- bunabhucan 4y ago
  Competitive advantage. If bigTechA and bigTechB discuss merging there will come a point in the due diligence where certain employees are asked to review competitive secret sauce of the other company with the understanding that if the merger unravels for some reason they will have to take a package and stop working for their current employer. I can't imagine the mbs/loan portfolio is that proprietary though.
  - qbasic_forever 4y ago
    SVB is dead. The company has failed. There is no competitive advantage because SVB is not in competition anymore, it is dead. The former SVB employees are sticking on for 45 days (at 1.5x pay) to tie up loose ends according to the FDIC. But SVB is dead, the assets are being sold and might as well be public record at this point.
    - nwatson 4y ago
      Isn't there goodwill value left over because of relationships and institutional knowledge, even after SVB is stripped of assets and after debt is accounted for? Might some larger bank retain that operation and return some value to taxpayers?
      - 700000thMistake 4y ago
        [dead]
      - youngtaff 4y ago
        Goodwill is the difference in value between the assets of a company and the price an acquirer paid for a that company
      - drexlspivey 4y ago
        Their liabilities are greater than their assets, there is no equity value left. Someone can acquire them for $1 if they want to assume their liabilities.
      - toast0 4y ago
        Not sure how much goodwill is left, given that a big herd of depositors left on thursday. But there's probably some. If you kept continuity with a more diversified client base, that's probably enough for many customers to stay.
seanhunter 4y ago
The data is full detail. You know if you don't put the winning bid in that one of your competitors are holding those assets, and in certain cases even know who is holding it [1]. In this case it doesn't really matter that much because most of the assets that caused the problem are not the loans but the MBS that SBV bought because it had massively increased deposits and couldn't find enough eligable borrowers to lend out to.[2] [1] For various reasons it's not just "the winning bidder holds all the stuff". There's a lot of horse trading where people buy chunks of it and the winning bidder gets the rest. This is important from a TBTF point of view because the bank had a problem (ldo that's why it failed) so the FDIC and regulators don't really want a single other bank to just inherit all the problems. They would prefer them to be spread about a bit so there isn't just one bank under massive stress. [2] Yes yet another bank failure caused by mortgage backed securities although in this case it seems from the public information that it was actually the hedging strategy that caused SBV to go down, not the MBS. The reason MBS means it doesn't matter that much is all the information about individual MBS is public anyway and although you don't know who holds what on a line by line basis you know generally how much each bank on the street has and you know someone is holding all the pieces of a given bond.
- hd95489 4y ago
  How much of a haircut do the assets take during the process. I’m assuming nobody is paying market rate so how much under is the bid? Like 80% or like 30-40%
  - twoodfin 4y ago
    Given the constraints, the result of this auction is likely to be the closest measurement of “market rate” we’re going to get.
    - hd95489 4y ago
      Only a few chosen players get to bid so it’s going to come with some haircut off market
  - seanhunter 4y ago

drexlspivey 4y ago

Why would they need to un-see it?

bunabhucan 4y ago
Competitive advantage. If bigTechA and bigTechB discuss merging there will come a point in the due diligence where certain employees are asked to review competitive secret sauce of the other company with the understanding that if the merger unravels for some reason they will have to take a package and stop working for their current employer. I can't imagine the mbs/loan portfolio is that proprietary though.
- qbasic_forever 4y ago
  SVB is dead. The company has failed. There is no competitive advantage because SVB is not in competition anymore, it is dead. The former SVB employees are sticking on for 45 days (at 1.5x pay) to tie up loose ends according to the FDIC. But SVB is dead, the assets are being sold and might as well be public record at this point.
  - nwatson 4y ago
    Isn't there goodwill value left over because of relationships and institutional knowledge, even after SVB is stripped of assets and after debt is accounted for? Might some larger bank retain that operation and return some value to taxpayers?
    - 700000thMistake 4y ago
      [dead]
    - youngtaff 4y ago
      Goodwill is the difference in value between the assets of a company and the price an acquirer paid for a that company
    - drexlspivey 4y ago
      Their liabilities are greater than their assets, there is no equity value left. Someone can acquire them for $1 if they want to assume their liabilities.
    - toast0 4y ago
      Not sure how much goodwill is left, given that a big herd of depositors left on thursday. But there's probably some. If you kept continuity with a more diversified client base, that's probably enough for many customers to stay.

seanhunter 4y ago

The data is full detail. You know if you don't put the winning bid in that one of your competitors are holding those assets, and in certain cases even know who is holding it [1]. In this case it doesn't really matter that much because most of the assets that caused the problem are not the loans but the MBS that SBV bought because it had massively increased deposits and couldn't find enough eligable borrowers to lend out to.[2] [1] For various reasons it's not just "the winning bidder holds all the stuff". There's a lot of horse trading where people buy chunks of it and the winning bidder gets the rest. This is important from a TBTF point of view because the bank had a problem (ldo that's why it failed) so the FDIC and regulators don't really want a single other bank to just inherit all the problems. They would prefer them to be spread about a bit so there isn't just one bank under massive stress. [2] Yes yet another bank failure caused by mortgage backed securities although in this case it seems from the public information that it was actually the hedging strategy that caused SBV to go down, not the MBS. The reason MBS means it doesn't matter that much is all the information about individual MBS is public anyway and although you don't know who holds what on a line by line basis you know generally how much each bank on the street has and you know someone is holding all the pieces of a given bond.

hd95489 4y ago
How much of a haircut do the assets take during the process. I’m assuming nobody is paying market rate so how much under is the bid? Like 80% or like 30-40%
- twoodfin 4y ago
  Given the constraints, the result of this auction is likely to be the closest measurement of “market rate” we’re going to get.
  - hd95489 4y ago
    Only a few chosen players get to bid so it’s going to come with some haircut off market
- seanhunter 4y ago