SVB down 60% today and also got downgraded by S&P to one notch above junk (big deal for a bank). Looks like decline is largely due to higher cash burn from SVBs clients, mostly startups who can't raise new capital and are maxing out their revolvers with the bank.
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Comments (303)
Wonder how IBD is working, I know they took UBS's SF tech team a few years back. Curious to know if they spin off banking and VC or just hope for better days in the not too close future.
Following
Honestly what happened here. I thought they didn't need to sell any of the AFS book. How were they able to mislead folks this much?
Looking ugly
What is the implication for any start ups that bank with them? Is there any risk there?
Can you people just use the full name? I don't know what the fuck SVB or whatever is. Fuck off
Then why the hell did you click on this thread bum? Based on your comments from other threads all you do all day is bitch
I think it's Silicon Valley bank. May go under or be acquired for cheap. I have a brother in a start up and he got maybe 20 calls to pull his money yesterday. He said there was a legit run on the bank.
Did you figure it out yet? If not: https://letmegooglethat.com/?q=svb
Yes I did, thank you.
Good. Those ubs tmt guys hopping over there and screwing me and everyone at UBS out of sky high bonuses during 2021-2022 (since tmt revenue collapsed) really irked me.
One of my colleagues met with a few people from our team last week that went over there over the last couple years. They were trying to sell her hard about how great it was….. oh how the tables have turned.
I heard the goats in SF today were actually these BSDs fleeing SVB before it goes under.
I heard when it got bad at Merrill lynch rumors were circulating between employees the bank wouldn't be able to make payroll. Wonder if those threads might pop up on WSO for SVB. Crazy to think banks not making payroll
I'll tell you this- heard from an insider. Today was bonus payday for SVB. Commercial type banks pay in March/April. SVB bankers did not revive their bonus.
NFW. Really? So svb's investment bankers got their comp communication a couple weeks ago or whatever, and were supposed to (but didn't…) get the actual $, and never will?
All the stock comp that the SVB seniors got is worth nothing now, major fail. Likely will mean they will jump ship first chance they get- maybe back to UBS, whose stock has outperformed almost every bank in the down market given the conservative, WM-focused strategy.
No way cash bonuses for anyone at SVB will be good this year, so would expect high attrition in the coming months across levels and departments. Even if the bank survives the brand is irreparably harmed already, like CS.
My wife's bonus was paid earlier this month, and about in line with last year. She's in credit though.
Wife works there, supposed to get paid tomorrow. Hopefully they don't got the CS route.
No offense, really, but what's your point? If she was paid at all in stock, her comp isn't in line with last year anymore. (If it is, that's because the unvested portion of last year's bonus has collapsed in value too).
And the op was referring to next year's bonus cycle - the one that will come after, not before, the liquidity crisis.
Really?? I heard from some bankers today was their bonus payment day and they did not receive their bonus.
Per business insider when those seniors from UBS joined they all signed 3 year lock ups
Wonder what this means for all those big name dudes (Auerbach, King, Jackey, etc) that joined during their hiring frenzy. Are they just gonna go back to where they were at/can they even go back or would they try and stick it out?
Best SVB and its employees can hope for is to get acquired - otherwise with the massive losses in deposits / loans they're seeing they'll have to do a massive RIF asap to cut costs
What is an SVB and why are people comparing it to ML in the recession lmao
It's a bank, they bank like half of the startups in the valley. A huge lender. But they got pretty famous last year on this forum when they poached the whole entire ubs tech practice. Basically gutted them dry with good pay, analysts to managing directors.
Holy shit. Remember how many companies got fucked over because of Lehman? I'm so curious whats going to happen to all of those companies that are going to have to deal w/ SVB's possible bankruptcy. Not to mention tech is in a pitfall this year, and probably next. Silicon Valley looking like its gonna burn
their mortgage backed securities are underwater because interest rates rose so quickly. not unreasonable for investors to want to sit on the sidelines, but they'll ride this wave out. they'll sell bonds in their afs portfolio but unlikely have to resort to its htm bucket
What concert costs 45 cents? 50 Cent feat. Nickelback.
.
I don't think so. It's more that they had massive inflows during the COVID boom when every Tiger shitco was opening up SVB corporate treasury accounts. They had to deploy that capital and bought fixed income when rates were low and are taking losses now that they are higher. Plenty of other banks are gonna take losses on their bond portfolios, but SVB was/is uniquely levered to the COVID bubble.
If anyone thinks this is a Lehman they're smoking crack. Not great for the company / shareholders and I'm sure management with SBC are pissed but worst case they'll take a (painful) bath on their MBS portfolio and raise capital at a discount to keep the lights on. Very low chance they go under IMO but a few years of pain probably head.
EDIT: I was wrong lmaoooo
Think that's exactly what already happened
totally agree though. Do not think the move warranted a 60% stock decline from already greatly reduced price vs a year ago
What you're missing is the 15bn in short term borrowing they took in 2022 to already keep the lights on. No one wants to give them debt and they're near junk bond levels. They have 5 bn in cash and like 50% of their assets in MBS.
Little misleading. It's all about how quickly they're going to burn through deposits. Things will improve for these start ups in the coming months and there were signs of the cash burn stabilizing. I don't think them selling the AFS portfolio warrants the kind of drop we saw yesterday. Obviously this quarter must have been brutal for them in terms of deposit burn. It's crazy because when they reported only a few months ago things looked okay and no one was fretting about some big drop in deposits, but should've been accounting for it because it basically just took a bad half quarter
Lol
Market is fucked today, I work on a rates desk and we have exposure with them. Probably going to take a small hit. My MD and the BSDs in capital markets have been on calls all day trying to figure out where else we may have exposure. They ARE NOT the only bank that got really long long duration assets. Funding costs are way up and their long dated assets are tanking.
Where are those SVB fan bois who rushed to WSO to tell us how it was far superior to Piper, Cowen, etc. and was poised to be the next EB?
Even bankrupt, SVB is better than whatever the fuck Robert Bosch is.
Apparently you deliver negative value
Also curious, that random ER poster from there used to vehemently defend the firm like he was their guardian or something.
Svb down another 60% premarket lol
Putting a price target at 25 when after brokerages sell off all their inventory
Surprised at how fast this is happening.
Hoping for ubs to buy them. Would be hilarious
Won't happen but I hope Wells buys at least the seniors. Would be nice for our SF office to not be shit anymore
Recall- Wells cannot acquire anyone at all. They have restrictions from the Fed. Wells is out of the acquiring game for now.
https://www.cnbc.com/2023/03/10/silicon-valley-bank-financial-in-talks-to-sell-itself-after-attempts-to-raise-capital-have-failed-sources-say.html
Ubs make your move!
They are dead dead. Buckle up
The clouds are purple, LFG boys. Be ready to deploy!
Know someone who was close to the sales team when they were pushing to grow faster. Unfortunately, the 2018 boom really hurt them as they went from disclipne to hyper growth. A lot of their portfolio is startup pharma, so yah they area probably done and someone will get the remains.
Don't cover financials so had no idea about that but based on the above statement I can't see how they're not done knowing that
Wonder if the IB segment gets bought. Know some friends at other firms who've said they heard their firms were looking at buying one. Could make sense here assuming no one buys all of SVB and no one doing that.
Nobody buys a distressed IB team of 50 guys. That's a very recent piece of their business that is now worthless and filled with people who are mad about their 2023 comp
agreed, better to just buy the bankers
SVB just gave up on cap raise, now looking for buyout. Someone might make an offer but I don't see a single way they aren't going solvent
Who is going to buy these guys? Wells? UBS? Will the FED intervene if a process isn't able to get done?
fuck no the FED won't intervene. this bank can fail and there won't be any real consequences in the financial market
I'm sure you could find people who would've said the same about Bear and Lehman. This is not a 1:1 comparison but all it took was 24hrs for a top-20 bank by asset size to go from apparently solvent to FDIC receivership. This is a serious situation.
This is wrong. This has potential for contagion across the sector in a number of ways.
WF or RBC should buy them
BMO
https://twitter.com/zerohedge/status/1634232614746767380
"FDIC: SVB BANK CLOSED BY CALIFORNIA REGULATOR'
"SVB Fails as FDIC Takes Over and Appoints a Receiver"
https://www.bloomberg.com/news/live-blog/2023-03-10/the-fallout-from-svb?srnd=premium
vincecarteritsover.gif
SVB is now in receivership. Its over
brutal. its over for SVB brahs.
incoming interns and full time analysts time to look for a new job (Srs)
Do you think they will rescind offers?
Is the sky blue?
"Yeah man I'm doing IB at the FDIC this summer. Pretty sweet gig"
Of course you have to look for other roles lmao. The firm as we know it is gone.
They won't rescind offers because there's no need to. There isn't a firm there anymore.
Oh, to be young and naive <3
if you are serious, you should be networking on Monday unfortunately. SVB is done
https://www.fdic.gov/news/press-releases/2023/pr23016.html
Toasted.
Fuck I've been banking with them, there yields were excellent and now I can't withdraw am I screwed?! I have like 13k in there rn
FDIC insures up to $250,000 I believe
This is what FDIC insurance is for. You're good
Looks like someone forgot their FDIC questions from their series/licensing exams
Congrats to all the SVB analysts on their sweet new jobs at JPM!
Array
The fall of Hipster Soy Capital is upon us. Big Tech (he/him) will kneel in defeat before the one true apex predator of the capitalism kingdom, Wall Street. I come to you as the herald of a changing of the guard.
What great thing has VC done lately besides WeWork and Theranos?
Do not fear the economic collapse. A new era, an era of Giga-Chadism is upon us. Once again people will dress in suits and ties, instead of some West Coast athleisure degeneracy. People will trade away their workplace Latinx climate change diversity seminars for hookers and blow. They will go through their offices, find a bottle of Macallan 25 sitting in a supply closet, the bottle covered in dust as no one has been drinking scotch in the workplace for quite some time, and they will say, "hello old friend." People will put aside their wine bars for tasteful banter with GF and RETVRN to models and bottles.
Nature is healing. Embrace the chaos as a wildfire that clears away old brush for a new forest to grow.
The day of reckoning is nigh upon us!!!! Come hither to darkness!
💀😂🔥
What a beauty!
Hot take....I think a big name like GS or MS looks to pull a mini-Barclays/Lehman and buy the best parts here. SVB is relationship bank first and foremost with unparelleled relationships in tech - a bit of brand equity from a top name could wipe away all feelings around the bank failure and charge up a tech practice
brah those relationships are pretty burned at the moment lol
"Hey Founder X, I know things didn't go so well last time with me losing your entire deposit and bankrupting your last company, but I am at The Goldman Sachs now. What do you say we run it back?"
Join the club of, "I have no clue how IB works". No one is scooping up these hooligans.
These companies are going to lose billions of deposits... Saw somewhere there's like $150B+ of unsecured deposits. No amount of brand equity is gonna save those relationships
Also most of these relationships are with struggling startups, not the financially stable (or at least kinda financially stable) unicorns that GS/MS actually wants to deal with. BBs want zero to do with volatile startups that max out their revolvers and go bankrupt (see: why SVB went kaput)
That's not why SVB went "kaput".
Do you know how to read?
About 97% of SVB deposits are structured over the FDIC limit. I have 3 clients with SVB funds- all In the $20MM-$80MM range. They may have lost everything.
They have zero relationships at this point. Founders are done with them, as are VCs. Complete mismanagement.
Remember when Cramer said this SVB stock was well positioned only two weeks ago?
Cramer recommended Lehman and Bear literally until the day before they collapsed. Why would anyone ever listen to Cramer?
I mean he has been so wrong about so many things for so long. I wonder why no one has made an "anti-Cramer" etf yet
There is lol
Look up the ticker SJIM lol
What banks are likely gonna buy SVB?
is it more likely the internationals like BNP, Mizuho, Nomura, etc?
Why would anybody buy SVB? They have no assets left. Wouldn't it be easier to just poach the MD with the best relationships
They may pick up bits and pieces of it but doubt SVB is purchased outright. This isn't like 2009 where the bank for sale is a game-changing giant. SVB's clients are mostly volatile, early-stage tech companies no one wants to deal with. Much better to just grab a few bankers from there, given they are already unemployed
When clients can't access their funds beyond the $250k FDIC insurance limit, there are no more relationships. That platform has no value.
There will be wave of startup bankruptcies unless the government is decides to make depositors whole. They shouldn't. You decided to keep your money at a shitty little bank that was entirely exposed to high growth sectors and didn't know how to manage duration risk, that's the risk you took.
Yep, My MD is already trying to take advtange of this, pitching M&A ideas based on startups who had too much money in SVB and may be unable to make payroll. May get some fire-sale type deals for exceptionally cash poor companies.
Will they have to wait post restructuring to get their money back? How does this work?
The government SHOULDN'T backstop SIVB, but they probably will. Those tech companies by in large directed their campaign contributions to the current administration, so they'll want to call in a chit. They'll spin it as a bailout of main street (lol).
This isn't a Democrat/Republican or left/right comment but a comment on cronyism.
Seriously what is the deal for incoming SAs and analysts?
There is no firm. It's 100% over
He is not correct
Start looking, you should have started this morning. Now you need to wait until Monday.
SVB is done, they can't keep the lights on and you think they will be bringing in Analysts and Associates? Start hitting up WF, RBC and EBs that are in growth mode.
Seriously- you need to find another place to work.
Is it true that only something like 3% of their deposits are insured?
This is the question many are asking. I saw an article saying SVB forced many companies to make SVB their exclusive banking partner (wrote as a debt covenant). If that is the case, it seems like many companies could be left with very little of their deposits depending on what the banks assets end up being worth upon liquidation.
Can confirm, many loans had sole banking terms baked in
This is huge.
Yes. But latest counts are like 85% vs 97%. It's the nature of venture lending.
https://time.com/6262009/silicon-valley-bank-deposit-insurance/
Despite what many on here are saying, I work at SVB Securities and the bank is insulated from the commercial bank and will continue to do business.
This may be as an independent spinout (basically business as usual with a different name) or being acquired by another larger firm.
LOL. You are in denial right now. Your firm just failed. All assets will be fair game in bankruptcy. You are not insulated, you and your MDs are just coping.
If you say so.
LMAOOO dude do not throw inaccurate BS like this on a thread. If you want to cope, go do it in your moms basement. There are prospectives here who might just read this BS you commented and think they are safe. Let them start making moves and trying to figure out where to land.
SVB failed big time by being dumb and brought down some startups with them LOL.
Dude I also work for SVB Securities and he's right. We're pretty insulated from the commercial banking side and have been operating like business as usual. We don't use the balance sheet and primarily generate revenue from M&A advisory fees.
Either we get carved out as an independent entity or get sold to a bigger platform. The latter would mean the junior folks (like myself) are probably out of a job. There seems to be a lot of misinformation / misunderstanding about SVB Securities vs Silicon Valley Bank. We never even shared an office with the commercial banking side of the firm. Most folks in my group are actually pretty optimistic about the prospect of becoming an independent firm. But there's obviously still a lot of uncertainty rn.
Wow. Just wow.
Massive coping here. I think anything is on the table including everyone losing their jobs. To think you're "insulated" is completely foolish.
Yeah buddy's like "we're still working like normal" and the bank literally failed like 3 hours ago lol
Well I guess we will see what happens and if your little hypothesis comes correct.
Take the dust off your resume and look to lateral. It's over bud.
Array
I keep hearing a few analysts from the firm say this. The reality is the MDs saying the investment bank is fine have no idea what will happen next. Even if depositors are made whole, the parent company equity value will likely go to zero. An acquisition by another firm will not necessarily save the IB staff. Will be very hard to win mandates after causing so many start-ups massive liquidity issues and potential losses; even more so given it is entirely SVB's fault and was completely preventable by proper asset-to-liability management which is banking 101. Very poor leadership by the bank to get in this position.
-Lehman M&A team 2008
you realize your firm wont be able to make payroll right?
any cash on the bs they are using to pay you guys is fair game. any fees you are generating can go straight to creditors.
they will try and sell off assets as quickly as possible (or wind down operations to stop paying you salaries).
Did the GA equity get wiped out?
The subscription agreement with General Atlantic is contingent on the closing of the offering of common stock and is expected to close shortly thereafter.
Sounds like GA never even closed since the offering didn't go through
deleted
David salmon to personally buy what's left of svb to launch a silent disco!
Their Head of Risk Management was a diversity hire
I bet you thought this was funny as you typed it
The poor girl was just hired in January, they had no one for 8 months prior to that I guess, no wonder its a mess over there. Unfortunate she has experience at both DB and AIG ("expert" risk managers from the last crisis). Also worked at Fitch in 2007, so presumably helped manipulate the CDS ratings during those days lol
good god, her track record.... i wonder at what point its her fault lol
This is factually correct.
Source from original document: https://www.svb.com/globalassets/library/uploadedfiles/diversity-equity-and-inclusion-at-svb_august-2022.pdf
They didn't have a C-level risk director until the Kim Olson was hired in January, so it was on Jay Ersapah below out of their UK office. Kim Olson didn't have time to figure out which way was up probably. This is on Ersapah and the SIVB CFO.
cant make this up
its ok, SVB probably has a really high ESG score
If we're being honest, this failure is entirely the fault of the CFO and Treasury team. Not an issue with the ability to assess their client's creditworthiness. Amazing failure by the Finance team to get the bank into such a preventable position by mismatching assets/liabilities.
The buck should stop with the CFO, agreed.
Their CAO is an ex Lehman CFO, oh the irony
Startups should be able to access their funds to some extent right? I read that they can still write checks against the funds.
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