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> But why would they buy the SVB's assets at 1.5%, when they can buy similar assets on the open market yielding 4%? Hypothetically because they are martyrs wh
by anonymouskimmer 4y ago
> But why would they buy the SVB's assets at 1.5%, when they can buy similar assets on the open market yielding 4%?
Hypothetically because they are martyrs who also want whatever goodwill SVB created in its clients (which now become the clients of the other bank). But yeah, it's a stretch.
- disgruntledphd2 4y agoI mean, if you think that you can grow your business by getting in early with tech founders, then it makes sense. But that's pretty risky for a bank.
- tripletao 4y agoI do think that's a fair point in general, and one that I'd neglected above--lots of marginally insolvent banks have been rescued in exactly that way, with an acquirer paying a premium for the value of the business, not just the financial assets. The mark-to-market hole at the SVB was pretty deep though, and their depositor base had just made itself look particularly unattractive. So maybe the FDIC will eventually manage to find a buyer, but it indeed looks pretty hard.
- anonymouskimmer 4y ago> their depositor base had just made itself look particularly unattractive Quite true.