*Official* BBCWatcher club

[BBCWatcher]

Here's the New York Times story on the Silicon Valley Bank failure. Look at this:

Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump.

In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg Becker, was a strong supporter of the change, which removed the requirement that banks with assets under $250 billion submit to stress testing by the Fed, and changed requirements for the amount of cash they had to keep on their balance sheets to protect against shocks.

Fabulous.

 

[revhappy]

How much profit? I see the chart unless u buy during Oct Lows....else not much % gains right

I thought I already quite paper hand when comes to reit....>15% profit i always tempted to sell off when i intended to hold for long term too whahahaha

I dont look at absolute %. If I make 1% in 10 days, that is like 36% annualized. I will take it. Actually this is my fixed income money thats why I put it in AGG. So I made 1% in 10 days, I can now put it in SG Tbill and earn 4% annualized for the next 6 months, I am still happy because of the 1% I already made in 10 days.

This amount I invested is 80K SGD though. So if I make 1%(it is a big if, depends on what yields do on Tuesday after the inflation report), it is $800 fun money.

The most important thing is when I am doing all this with my fun money, I can leave the rest of my portfolio untouched and let it do its thing. It is kind of like necessary distraction for me so that I dont do crazy stuff with my main portfolio.

 

[DevilPlate]

I dont look at absolute %. If I make 1% in 10 days, that is like 36% annualized. I will take it. Actually this is my fixed income money thats why I put it in AGG. So I made 1% in 10 days, I can now put it in SG Tbill and earn 4% annualized for the next 6 months, I am still happy because of the 1% I already made in 10 days.

This amount I invested is 80K SGD though. So if I make 1%(it is a big if, depends on what yields do on Tuesday after the inflation report), it is $800 fun money.

The most important thing is when I am doing all this with my fun money, I can leave the rest of my portfolio untouched and let it do its thing. It is kind of like necessary distraction for me so that I dont do crazy stuff with my main portfolio.

I see, u are somewhat super conservative.
I would thought fun money is like itchy finger portfolio and buy into growth and meme or doggy coins whahaha

My fun money is actually visiting Genting casino for entertainment whahahaha

 

[a4973]

Here's the New York Times story on the Silicon Valley Bank failure. Look at this:

Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump.

In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg Becker, was a strong supporter of the change, which removed the requirement that banks with assets under $250 billion submit to stress testing by the Fed, and changed requirements for the amount of cash they had to keep on their balance sheets to protect against shocks.

Fabulous.

What effects will SVB failure have in SG?

 

[BBCWatcher]

What effects will SVB failure have in SG?

Approximately zero effects, I expect.

 

[BBCWatcher]

Roku (the streaming media company, symbol ROKU) reportedly had 26% of its US$1.9B in cash on deposit at Silicon Valley Bank, or about US$487 million. However, Roku's management doesn't think this'll be an operating problem.

An interesting aspect of this failure is that the U.S. Federal Reserve will presumably take it into account in its monetary policy decisions. The Federal Reserve presumably doesn't want to create or contribute to bank failures. So to that extent there could be some impact on Singapore and the Singapore dollar.

A possibility is that the FDIC will reach a deal with an acquiring institution. SVB has interesting clients, and there might be another bank willing to acquire SVB's deposits in full over this weekend at the right price. There's a very short list of potential acquirers, though, since SVB is quite chunky.

Media reports suggest those uninsured depositors at SVB are likely going to be made whole eventually. They reign supreme in the hierarchy of claims, and it seems the experts think they'll be OK. But those depositors will have liquidity issues in the meantime unless there's a "white knight" that takes the deposits over this weekend. Some other banks might be tempted as long as they can get a reasonable handle over the weekend on the accounts and accounting.

So...who'd consider a bid? I don't know. Maybe a super regional bank like U.S. Bancorp or PNC? Or perhaps somebody like Charles Schwab (which has a relatively tiny bank affiliate based in Nevada)? This is a tricky one because SVB has such an unusual client base.

 

[deepblueli]

Roku (the streaming media company, symbol ROKU) reportedly had 26% of its US$1.9B in cash on deposit at Silicon Valley Bank, or about US$487 million. However, Roku's management doesn't think this'll be an operating problem.

An interesting aspect of this failure is that the U.S. Federal Reserve will presumably take it into account in its monetary policy decisions. The Federal Reserve presumably doesn't want to create or contribute to bank failures. So to that extent there could be some impact on Singapore and the Singapore dollar.

A possibility is that the FDIC will reach a deal with an acquiring institution. SVB has interesting clients, and there might be another bank willing to acquire SVB's deposits in full over this weekend at the right price. There's a very short list of potential acquirers, though, since SVB is quite chunky.

Media reports suggest those uninsured depositors at SVB are likely going to be made whole eventually. They reign supreme in the hierarchy of claims, and it seems the experts think they'll be OK. But those depositors will have liquidity issues in the meantime unless there's a "white knight" that takes the deposits over this weekend. Some other banks might be tempted as long as they can get a reasonable handle over the weekend on the accounts and accounting.

So...who'd consider a bid? I don't know. Maybe a super regional bank like U.S. Bancorp or PNC? Or perhaps somebody like Charles Schwab (which has a relatively tiny bank affiliate based in Nevada)? This is a tricky one because SVB has such an unusual client base.

Maybe Elon musk haha

 

[BBCWatcher]

I'm doing some more reading now about the Silicon Valley Bank collapse. According to one analyst there will be roughly 300 startup companies that won't be able to make payroll in about 30 days if their uninsured deposits are still frozen at Silicon Valley Bank. And if your company can't make payroll then you don't get to keep your employees very long, especially the best ones.

But even if this cash crunch occurs will it be of systemic risk that seriously threatens the wider macro economy and results in contagion? I doubt it. Startups fail all the time, and the Bay Area (where most of this action is located) has an incredibly fluid, dynamic labor market. There will be winners and losers, and the capitalist process of "creative destruction" will continue. It'll definitely be disruptive, and real lives will be impacted. I'm not trying to minimize any of that. But I don't think the regulators are concerned. As I interpret the media reports they're just not concerned. (Of course they always say they're not, but I'm reading between the lines also.)

That said, I think the FDIC will still try to package a deal for an acquiring institution and hold a telephone auction this Sunday with the short list of qualified suitors. So by Monday Singapore time we might learn that SVB's deposit accounts are held by (Bank X). We'll see!

 

[BBCWatcher]

This factoid is quite interesting too: 89% of Silicon Valley Bank's deposits are uninsured according to the FDIC's estimate as of the end of 2022. (The figure is probably somewhat lower after the bank run.) For Washington Mutual (the biggest U.S. bank failure in history) it was 24%.

J.P. Morgan Chase acquired Washington Mutual, and nobody lost any deposits.

 

[deepblueli]

USDC panic sell is happening as I mentioned. Short seller probably earns if they manage to find venue to do so

 

[BBCWatcher]

USDC panic sell is happening as I mentioned. Short seller probably earns if they manage to find venue to do so

Circle Tweeted that about US$3.3 billion of their purported US$40 billion reserves are trapped at Silicon Valley Bank. DAI, USDD, and FRAX also de-pegged. (DAI has over half of its collateral in USDC.)

I suppose some of Silicon Valley Bank's depositors hold certain cryptocurrencies, and some of them may need to trade cryptocurrencies for real U.S. dollars to meet payroll and otherwise keep their businesses running.

(Who wants some popcorn?)

 

[light84]

I'm doing some more reading now about the Silicon Valley Bank collapse. According to one analyst there will be roughly 300 startup companies that won't be able to make payroll in about 30 days if their uninsured deposits are still frozen at Silicon Valley Bank. And if your company can't make payroll then you don't get to keep your employees very long, especially the best ones.

But even if this cash crunch occurs will it be of systemic risk that seriously threatens the wider macro economy and results in contagion? I doubt it. Startups fail all the time, and the Bay Area (where most of this action is located) has an incredibly fluid, dynamic labor market. There will be winners and losers, and the capitalist process of "creative destruction" will continue. It'll definitely be disruptive, and real lives will be impacted. I'm not trying to minimize any of that. But I don't think the regulators are concerned. As I interpret the media reports they're just not concerned. (Of course they always say they're not, but I'm reading between the lines also.)

That said, I think the FDIC will still try to package a deal for an acquiring institution and hold a telephone auction this Sunday with the short list of qualified suitors. So by Monday Singapore time we might learn that SVB's deposit accounts are held by (Bank X). We'll see!

I see it as a sign of the Fed has tighten until something in the system is starting to break. SVB is not going to set off a systemic contagion of bank runs but somewhere out there, more stuff is going to break. Which mean interest rate hikes may cap off soon ..

 

[BBCWatcher]

Here's what Silicon Valley Bank reported last quarter for key solvency metrics:

Tier 1 Capital Ratio: 15% (Basel III Requirement: 6%)
Tier 1 Leverage Ratio: 8% (Basel III Requirement: 3%)

This bank was quite healthy on paper. The problem seems to be that its super concentrated depositor base was prone to skittishness because of the turmoil in the cryptocurrency world with FTX and other failures/scams. The good news is that SVB's uninsured depositors are that much more likely to recover their deposits given their bank had these solid metrics.

It's odd SVB's Web site is still (as I write this) showing all normal content as if nothing whatsoever has happened. I think that's an indication of just how fast this failure occurred. Instead of a bank run this was a bank sprint.

 

[deepblueli]

Circle Tweeted that about US$3.3 billion of their purported US$40 billion reserves are trapped at Silicon Valley Bank. DAI, USDD, and FRAX also de-pegged. (DAI has over half of its collateral in USDC.)

I suppose some of Silicon Valley Bank's depositors hold certain cryptocurrencies, and some of them may need to trade cryptocurrencies for real U.S. dollars to meet payroll and otherwise keep their businesses running.

(Who wants some popcorn?

It is definitely interesting to see how it progresses. USDC is the most USD collateral backed stablecoin, the collapse probably means put a nail to the coffin for crypto industry.

 

[CrashWire]

Speaking of stupid, if many startups and VCs parked a lot of uninsured money at SVB then that was pretty dumb. Wells Fargo, Bank of America, or Citibank (as examples) maybe I could understand. SVB was known as a “cowboy,” and there was a fair bit of warning about its imminent failure.

I can't verify the truthfulness of this claim, but it sounds like Shopify might have kept their merchant payments at SVB:



https://www.bloomberg.com/news/arti...se-about-14-billion-in-value-on-svb-contagion
This might affect a lot of e-commerce companies if true.

 

[BBCWatcher]

I must say it’s quite rich for the “tech bros” (and sisters) holding uninsured account balances at Silicon Valley Bank to be clamoring for a government bailout. The VCs caused this run on their bank. And now they want the government to rescue them? The most I’d offer is, say, Small Business Administration loans up to (for example) 50% on the dollar, secured by the account balances. These folks will likely make full recoveries, but it’ll take time.

It’s also really “funny” the regional banks, including SVB, lobbied the Trump Administration to exempt themselves from stress testing. Which of course now means they’re perceived as less reliable and less stable at the first sign of stress. Thus their stocks tanked in Friday‘s trading, and they‘re probably already subject to bank walks. That’ll require them to take certain steps to maintain enough capital (which they still must do). They got exactly what they wanted, and it’s hurting them a lot.

 

[DevilPlate]

2008 subprime crisis took >1 yr for things to get worse.
https://www.investopedia.com/articles/economics/09/financial-crisis-review.asp

 

[BBCWatcher]

On July 1, 2021, Silicon Valley Bank completed its acquisition of Boston Private Bank & Trust. It’s now known as SVB Private, and it’s perhaps the biggest asset SVB could (and probably will) sell quickly to another financial institution. When SVB acquired Boston Private it had about US$13.3 billion of assets under management. Now as SVB Private it has about US$2 billion more. SVB Private should fetch a decent price, and it would not be surprising to read a sale announcement within the next few days. SVB has not even fully integrated Boston Private’s branch offices, so it’ll be that much easier to spin back off.

The FDIC informed SVB’s employees on Friday that they will be paid 150% of their pre-failure salaries (and benefits will continue) if they stay on. That’s pretty typical especially when the bank failure is not due to any suspected or widespread fraud. (SVB’s management made some bad decisions, but there’s no evidence at this point they behaved illegally or nefariously. So the FDIC can trust the bank’s people — mostly, for now.) The FDIC wants “all hands on deck“ to clean up the mess, so it offers an attractive retention program. For now they’ve directed employees to work from home except for those who genuinely must come into office locations, such as branch employees that’ll be serving bank customers when branches reopen on Monday. (SVB has very few branches for a bank of its deposit size. It’s a very unusual bank.)

One of two things will happen within the next 24 hours:

1. SVB will reopen Monday morning under FDIC supervision, meaning accounts at or below $250,000 have full liquidity and those above will have partial liquidity to some amount in excess of US$250,000 (based on the FDIC’s first “dividend” tranche); or

2. SVB‘s branch locations will reopen Monday morning but as part of an acquiring institution, with full liquidity but perhaps with CDs (equivalent to fixed deposits) rolled over into new ones at new rates with the option to withdraw. The branches will literally have temporary acquiring bank banners covering the SVB signage until the acquiring bank decides what to do with the acquired branches.

If your bank fails you really want it to be a bank in the U.S. The FDIC is very good at what it does.

 

[cablemaster2000]

People think of bank runs as long queues for withdrawals at bank branches, but at least at bank branches, the tellers can be told to slow down their processing.

In this age of ebanking, depositors of SVB reportedly made wire transfer instructions to the tune of 40+Billions in the past week. I dont think there is any bank in the world that can deal with depositors withdrawing 20+% of their assets in a week. This is a classic case of shouting fire in a crowded theatre and I hope some people will get locked up, but probably not.

While SVB may have made some really stupid investment decisions, I think all depositors can be made whole if the assets are disposed in an orderly fashion, but they may have to wait a little. $250k is a minimum guarantee on Monday, the rest will come in eventually. Of course, not all depositors can deal with even a short delay, so there will be some carnage in Silicon Valley companies.

FDIC taking over and wiping out equity holders shows the US banking system has learnt from the Great Financial Crisis and is acting swiftly rather than letting SVB flail around begging and borrowing for another week.

It is reasonable to assume 50bps hike is off the table now.... JPow probably want to avoid making big moves. I still think he will want to make all those who claim the Fed lack "credibility" eat their words and stick with 25 bps as planned.

All the crypto bros are about to find out what are the real consequences to be above banking regulations.

 

[DevilPlate]

All their branches worldwide foreclosed?

read news about their UK branch gona collapse.