4 ms·

I'd buy that for a dollar! In all seriousness, they are also buying the all the liabilities and illiquid assets. So current value wise, this seems about right.

I'd buy that for a dollar! In all seriousness, they are also buying the all the liabilities and illiquid assets. So current value wise, this seems about right. However long term, a lot of these customers will stick with HSBC and may generate a lot of future value.

celticninja 4y ago
Buying financial institutions is always £1 or $1, I remember barings bank being sold for £1
- vidarh 4y ago
  No, it's not not always, or even usually, that. This reflects that it's a failing business (like Barings) where the real cost to the purchaser is taking on the risks and liabilities and injecting whatever capital and effort needed to extract value from the remaining assets. Many sales of solvent banks happens regularly too.
  - celticninja 4y ago
    I meant distressed financial institutions, I should have been more clear.
- helsinkiandrew 4y ago
  To be a legal contract in England (and probably anywhere whose laws are based on English commmon law) there has to be an exchange or consideration of a nominal amount between parties. It’s the same concept as why peppercorn rents are paid https://en.m.wikipedia.org/wiki/Consideration#Nominal_consideration https://en.m.wikipedia.org/wiki/Consideration#Nominal_consid... There’s a collection of once mighty companies you could buy for the price of a burger: https://www.bbc.co.uk/news/business-44250900.amp https://www.bbc.co.uk/news/business-44250900.amp
bell-cot 4y ago
> ...this seems about right. With huge uncertainties in the assets & liabilities, no time to narrow those down before deciding, executives often too optimistic about such situations, and the regulators obviously "shopping" potential buyers for the least-rational optimists ...my bet would be that it's worth far less.
- darkerside 4y ago
  It's worth less than zero now, and much more than zero in 8 years. If you can stay solvent until then, it's a great deal.
woleium 4y ago
Don't forget they are also buying the rights to skirt all the rules that SVB had.

celticninja 4y ago

Buying financial institutions is always £1 or $1, I remember barings bank being sold for £1

vidarh 4y ago
No, it's not not always, or even usually, that. This reflects that it's a failing business (like Barings) where the real cost to the purchaser is taking on the risks and liabilities and injecting whatever capital and effort needed to extract value from the remaining assets. Many sales of solvent banks happens regularly too.
- celticninja 4y ago
  I meant distressed financial institutions, I should have been more clear.
helsinkiandrew 4y ago
To be a legal contract in England (and probably anywhere whose laws are based on English commmon law) there has to be an exchange or consideration of a nominal amount between parties. It’s the same concept as why peppercorn rents are paid https://en.m.wikipedia.org/wiki/Consideration#Nominal_consideration https://en.m.wikipedia.org/wiki/Consideration#Nominal_consid... There’s a collection of once mighty companies you could buy for the price of a burger: https://www.bbc.co.uk/news/business-44250900.amp https://www.bbc.co.uk/news/business-44250900.amp

bell-cot 4y ago

> ...this seems about right. With huge uncertainties in the assets & liabilities, no time to narrow those down before deciding, executives often too optimistic about such situations, and the regulators obviously "shopping" potential buyers for the least-rational optimists ...my bet would be that it's worth far less.

darkerside 4y ago
It's worth less than zero now, and much more than zero in 8 years. If you can stay solvent until then, it's a great deal.

woleium 4y ago

Don't forget they are also buying the rights to skirt all the rules that SVB had.