IB FIG: How is Charles Schwabb still standing and FRC, SVB went down? Equity Capital v. HTM Depreciation Table for Top 100 Banks
I am not in FIG or IB expert, so question to y'all.
Someone smarter than me put together a chart of Equity Capital vs. HTM depreciation for a list of US banks (screen shot herein). Apparently this is what raising the havoc in banking liquidity now. So, on this list SVB is #2. The #1 on the list is Charles Schwab with the ratio of -172% [Equity Capital of 8.3bn and HTM -14.1bn]
Question:
(1) Looking at the 10K, I can't get the numbers to stack up for equity capital @ $8.3bn
(1.1) Do banks have to hedge the HTM securities? i.e. SWAPS or all un hedged
(2) How is Charles Schawb still alive with stock price @ $52 (-32%)
Schwab 2022 10k: https://content.schwab.com/web/retail/public/abou…
Posts like this all over is why the Fed had to step in people who think they found the reason after and want to point out issue elsewhere. HTM was a part of the problem to blow up SVB but the main issue is nothing new to banking for the past 100 years. They were a firm that grew aggressively and were overly concentrated to one sector.
In contrast, Schwab deposits have grown very slowly and as they mentioned 90% of accounts are below $250k threshold anyways. That all said cannot argue with anyone who does not want to be invested in a brokerage right now as their business model is not great for this macro environment either.
Anyways, the fed is now accepting at par instruments that are basically HTM so the fed has solved the gap.
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