SVB Going Under?
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.
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
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.
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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
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.
brutal. its over for SVB brahs.
incoming interns and full time analysts time to look for a new job (Srs)
“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.
Looks like someone forgot their FDIC questions from their series/licensing exams
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!
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?”
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.
He is not correct
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.
Their Head of Risk Management was a diversity hire
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…
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.
its ok, SVB probably has a really high ESG score
SVB's closure is idiosyncratic, just think about who they service. Their liabilities are highly dependent on corporate deposits from startups who are inherently risky burning cash while trying to grow. High attrition of funds. A typical regional bank's deposits are much more secure and stable being that it is usually more consumer. I don't think this will lead to many more bank runs and I think the market panic is sort of uncalled for and just a culmination of the boiling bearish sentiment underlying the market.
On the asset side, they sold their low yielding bonds to move into higher yielding, shorter maturity bonds. Even at a loss, this is a smart move. This is typical of banks, the problem was the speed and size of their move. That signaled to startup depositors that they may not be liquid which caused a bank run which will lead to their demise. FDIC will provide some liquidity but definitely won't cover all of the deposits. I think SVB ultimately is a necessary piece of the venture ecosysem and their demise is a huge blow for the space. Perfect opportunity for a bulge bracket (JPM 👀) to step into the space and play God.
Our Gen Z future leaders, ladies and gents
Heaps and bounds of misinformation on this sub. The securities arm will likely spin out and be standalone, Leerink Partners once was.
Source: I work here.
Edit: worked might be relevant here. Next week will show.
Rookie management team and board. Risk management in banking 101 is matching duration of assets and liabilities.
How they got it so far out of sync and left it there for months is incredible.
If depositors stand to lose anything, there isn't much hope for the equity holders. They're most likely all wiped out.
This will be a little controversial, but I think it's entirely possible that the FED may do some-type of bailout Monday morning. Here's my thinking:
The FED expedited the FOMC meeting to Monday, Janet Yellen just had a meeting with the treasury and the Federal reserve yesterday to discuss the collapse of SVB. The contagion is already starting to spread with ROKU, RBLX, Coinbase etc. all announcing that they had cash reserves in SVB and USDC tokens. Other regional banks are all tanking (which spreads fear amongst depositors). It's entirely possible that if we do see other regional banks start to go under, we could see smaller brokerage platforms go belly up as well (think Acorn, Chime, M1 etc.). If there is no backstop here, this will quickly turn into a meltdown on the regional side. The Tier Capital banks manage collectively $15T in assets while regional banks manage $5T, not as large, but still could become a systemic issue (which is also massively disinflationary, could even become deflationary, see the impact 2008 had on CPI.) We did not even begin to discuss how many VC funds could potentially go under.
Regulators also made a large mistake here. All banks are Stress Tested, this is true, but the Stress Test criteria that regional banks face compared to Tier Capital banks is an absolute joke, guess they never thought that there would ever be a scenario where we could potentially see regional banks fail en masse.
I understand the argument that SVB made stupid bets and it's largely their fault that this occurred, but think about the massive consequences here for one organization's stupidity and the potentially massive repercussions on the general economy that will ensue. It's not worth it just so the FED can prove a point.
It's difficult for me to see the FED throwing their hands up in the air and continuing to raise interest rates. They're likely going to pause (regardless of the CPI) next meeting, to see the full impact of their rate-hikes on the economy. Hiking rates this quickly and this high is obviously going to break something in the economy, and looks like we're now starting to see some serious cracks. To make matters worse, you have a President who may run for re-election next year, a financial meltdown (Again!), is not going to be forgotten easily.
Fun-fact, Only 1 incumbent president won re-election when there was a recession during their term: William McKinley in the early 1900s. No president has won reelection since then and I don't think this trend will change.
Idk, just thinking out loud here.
Still a Bailout, doesn’t matter what they call it. Bailing out tech garbage and ESG clowns. Comical. This isn’t over though, wayyy too many infra funds and others out there with loans well below the current interest rates. Just a matter of time before they blow and it’s a restructuring buffet.
Because they didn’t. Some of the principal on those loans remains outstanding to this day. Only when you include interest were the bailouts “paid for”.
And none of this includes the fact that when small businesses go bankrupt no one is there to give them interest free loans that can be paid whenever. That’s what upsets people. The fact that losses for banks are suddenly put on the public but when banks are doing well every tactic and loophole is used to lower tax burdens for these corporations
And honestly if you are a true capitalist then you’d believe that there should be no bailouts. Those who made the wrong risks should go down and those who were careful should succeed. 2008 should have led to the end of “too big to fail banks” and forcing many of their divisions to be separate individual companies.