SVB Stock Price Drops >50% in 2 Days, Other Banks Follow
"SVB Financial, which has been hurt by both rising interest rates and the tech industry downturn, sold a large portfolio of securities at a big loss Wednesday and is embarking on a major capital raise.The Santa Clara, California, company said that it sold a $21 billion portfolio of U.S. Treasury and agency securities, and that it will realize a $1.8 billion after-tax loss as a result of the sale." -https://www.americanbanker.com/news/svb-financial… This can't be good… looks like other bank stocks are dropping these past few days as well, although not to the same degree as SVB: Four Biggest U.S. Banks Lose $47 Billion in Market Value https://www.wsj.com/livecoverage/stock-market-new…
60 percent down now, Seem to have made a big bet on bonds in combination with start up deposits drying up, quite something.
Any idea how this will affect the IBD?
IBD will be affected to the extent that the bank simply needs to trim headcount. High rates and high cost of leverage could also lower buyside demand, but this isn't my wheelhouse so maybe a PE monkey can comment here. This whole story, in addition to SBNY and Silvergate (ik, crypto) makes me wonder if SVB is selling their dog shit or their bonds that havent gotten hit as hard. Banks everywhere, especially regionals and municipalities, have portfolios filled to the brim with low coupon trash from the low rate era that's gotten absolutely nuked over the past year. Bids on this shit are fuckin comical and even government backed agency product is seeing bids with 60 handles and lower. Who wants to realize that loss? Lol These banks have been raising billions upon billions in short term CDs over the last few months because its cheaper to raise that way compared to borrowing from the FHLB system (think 20-30bps cheaper). Loan demand seems to be slowing down, interesting jobs info, financials across the board spooking people. Very interesting point in time here.... I have no clue what's coming …. but the clouds are purple
Was on a call with upper management at my bank and I have never seen them this terrified. They are worried this is a Lehman type of moment that will likely spark a contagion event across the financial sector
Stay safe out there...things are getting ugly as this low rate era comes to an end.
no offense, but your bank isn't important enough to affect everyone else. most people haven't even heard of SVB even within the industry (srs)
This is true, I had no idea what SVB is.
Just to add to this, the KBW Bank index fell 11% in the last 5 days
I’ve been following them pretty closely and bought a bunch of their stock lol. My question is why are they selling? Is it because they are going to have serious issues with their loan book on loans to VC backed companies and need to cover that? I was under the impression that their loans weren’t doing too poorly and that a chunk of them were capital call loans to VC funds.
why didn’t they just hold the bonds to maturity?
A bit of speculation here, but I think it's because they need to generate the liquidity due to all of the high-burn startups pulling their deposits due to startups' cash needs or presumably the ability to earn a higher yield on the cash elsewhere (i.e. money markets).
Think the first one is spot on, second technically true too. I would assume the second one wouldn’t spook the markets as much on its own. I guess I’m not sure why this results in a 60% drop in the stock.
Wife works there and had a bit of stock, luckily sold most of it a few months ago.
Lol.
I remember all the sanctimonious hyping of svb here.
I don't see an active CDS market on SIVB or at least can't pull one up on Refinitiv.
As someone who got my career started in 2009...it gets worse lol
ICE CMA via CIQ. IQT717020925
They peaked in November '22 at around 90 bps and are down to roughly 60 for 1-year CDS.
god damn, I remember when this bank was getting mad hype. I have a few friends working there, I hope things settle down
RIP
Is it hysteria to say this could be a Lehman moment? I recall one Rich Handler saying “there’s no such thing as a minor liquidity crisis”…
Is SVB an EB now??
Wanted to become an EB so bad they destroyed their own balance sheet
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