agent69
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Post by agent69 on Mar 13, 2023 7:46:26 GMT
So a small American bank that specialises in lending in high tech start up companies goes pop when it anounces a $1.9bn loss, mainly due to the impact of high inflation on it's USA bond holding. As a consequence it's UK subsidiary also goes pop. Many UK tech companies have money invested in SVB (UK) and their immediate reaction is for 200 of them to write to the chancellor telling him he has to bail out the bank or they will all go bust.
Fortunately the UK arm of the bank has been taken over by HSBC, but it makes you wonder why a company would invest most of their assets in a small bank when it would be far more secure in one of the main financial institutions.
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benaj
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Post by benaj on Mar 13, 2023 7:58:26 GMT
No idea how many UK companies have money in SVB and SVB UK.
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Post by overthehill on Mar 13, 2023 9:19:25 GMT
You also shouldn't be surprised to discover TRUMP rolled back regulations which made this disaster inevitable at one or more banks.
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adrianc
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Post by adrianc on Mar 13, 2023 9:41:05 GMT
I don't quite understand this... (Or the twitterer doesn't - or does, but is trying to manufacture outrage?) Thiel's venture capital fund was a customer of the bank. Should the bank have refused to repay their deposit when requested? Many of their customers would have been VC funds operated by very wealthy, high-profile individuals. Various VC funds were advising withdrawal prior to the collapse - and it would have been strange not to follow their own advice. techcrunch.com/2023/03/09/silicon-valley-bank-firms-reactions/(Ah, Li seems to have previous with Thiel.) A trust on behalf of the CEO sold $3.6m of SVB shares in January, two weeks before financial results were published - insider trading rules will cover anything naughty there. Not paying their 2022 contractual bonuses to staff (which, I presume, would have been announced previously - and which would have been underway for days, if not weeks) on the usual annual bonus payment date would have caused serious repercussions - both reputational and legal. I doubt the figure involved is relevant to the failure.
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Post by bracknellboy on Mar 13, 2023 10:15:46 GMT
So a small American bank that specialises in lending in high tech start up companies goes pop when it announces a $1.9bn loss, mainly due to the impact of high inflation on it's USA bond holding. As a consequence it's UK subsidiary also goes pop. Many UK tech companies have money invested in SVB (UK) and their immediate reaction is for 200 of them to write to the chancellor telling him he has to bail out the bank or they will all go bust.
Fortunately the UK arm of the bank has been taken over by HSBC, but it makes you wonder why a company would invest most of their assets in a small bank when it would be far more secure in one of the main financial institutions.
according to Mr G, SVB was the USAs 16th largest bank. I'm not sure anyone in the UK asked the UK govt. to 'bail out' the bank in the sense those words intend to convey. But if they did it was far more likely to be a call to action rather than an indication of the actual action. Since the 2008 financial crisis, there is a pretty well trodden path for imminent bank failures in the UK. And that has been followed. The BOE obviously decided to not extend the additional liquidity requested by the bank, put the bank into Bank Insolvency Procedure, and has managed to exit that via another bank agreeing to take it on. Perhaps the reason they were banking with them was because of their specialisation in tech startups. In their early days they may have been more likely to get banking facilities including loans from them than they would a mainstream
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adrianc
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Post by adrianc on Mar 13, 2023 10:48:54 GMT
So a small American bank... according to Mr G, SVB was the USAs 16th largest bank. As of last September, 18th largest according to the US federal bank regulators... out of 4,746 registered banks - and that's down from 6,799 in 2014... Only just behind American Express by total assets. en.wikipedia.org/wiki/List_of_largest_banks_in_the_United_StatesThe US banking environment is very different to the UK's. Lots of very small regional banks still.
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keitha
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Post by keitha on Mar 13, 2023 10:53:58 GMT
According to it's own Figures SVB loaned money to 10 companies in Europe, from what I gather the reason so many companies invested was greed. the business model was you loaned then money they invested it in tech companies ( mostly small and startups ) so as they grew the value of your deposit grew. "fabulous returns". one major investor seeing issues caused problems. the mess reminds me a lot of Woodford there is a list www.investorschronicle.co.uk/news/2023/03/13/svb-collapse-list-of-uk-equities-exposed/ of major UK companies in this Being honest I wouldn't care if at least 1 of them went pop as it's a company I regard as a vulture |
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benaj
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Post by benaj on Mar 13, 2023 12:20:45 GMT
Pour moi, time to open bottles, be generous and gifting grape juice to friends and families, cancel subscription.
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keitha
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Post by keitha on Mar 13, 2023 13:59:25 GMT
LOL not the one I was thinking of
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Post by Deleted on Mar 13, 2023 15:19:01 GMT
Trump and Republicans caused this.
One fell this morning in NY
What twats
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Post by mostlywrong on Mar 13, 2023 15:47:29 GMT
Oh goodie, another banking crisis.
Right, I will use this opportunity to put my draft business plan into operation.
As these banks will soon stop lending to small businesses, I plan to ask a kindly bunch of suitable investors on a random website to join me by putting their hard earned savings into a fund that can then lend money at a suitable rate of interest to these small businesses.
I haven't managed to come up with a catchy name yet, nor found a suitable office with room for a table tennis table. And the computing power to drive the whole shebang needs a little more work but, Rodney, this time next year...
What could possibly go wrong...
MW
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agent69
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Post by agent69 on Mar 13, 2023 15:48:32 GMT
Just reading a bit more into this, it looks like the clients of SVB (high tech start up's and bio-tech companies) were a bit like the borrowers on P2P platforms. They were considered high risk and shunned by the main financial institution, so all went to SVB. Only takes one minor glitch and the whole house of cards comes tumbling down.
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Post by mostlywrong on Mar 13, 2023 16:08:23 GMT
Just reading a bit more into this, it looks like the clients of SVB (high tech start up's and bio-tech companies) were a bit like the borrowers on P2P platforms. They were considered high risk and shunned by the main financial institution, so all went to SVB. Only takes one minor glitch and the whole house of cards comes tumbling down. I am not quite certain that it was a "one minor glitch" that did for the bank.
Keeping to the US bank, my understanding is that they marketed themselves to web companies as a bank that understood them and was willing to be flexible. Over the years, money poured in and, as another poster has shown us, it was no 16 in the States. The money that poured in was used to purchase Treasury bills which were marketed (by the Fed) as ultra-safe. Until the Fed got queasy about inflation...
The price of Treasuries fell, the bank's assets fell in tandem, and they have been trying to raise more cash from shareholders for the last couple of weeks. But the shareholders were largely Venture Capitalists who realised that something was wrong and spread the word. Cash started walking out of the door. And here we are. In the background, the crypto-currency debacle will also be a factor.
I assume that the UK bank was structured in a similar way although the assets might have been in gilts, which have been similarly affected by the global rise in interest rates.
I have not seen any suggestions that it was the fault of any company that banked with SVB. On the contrary, the list of affected companies does not show any red flags (at least to me).
We all should have seen this coming as interest rates have been far too low for years. But we all just pretended that we could reach the exit before everyone else did!
The $64,000 question is who else is going to fail?
MW
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benaj
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Post by benaj on Mar 13, 2023 17:00:03 GMT
Could the 4th be another US bank beginning with S?
Silvergate, SVB, Signature..
I suppose the "system" has been improved since the last financial mess so we won't see another 100+ failed US banks again.
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keitha
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Post by keitha on Mar 13, 2023 17:08:55 GMT
Just reading that a lot of Techies invested in SVB ( and crypto ) because they didn't trust old fashioned banks and SVB was the future,
Now lots of them are asking where is the investor protection. Durr, investment carries a risk that you might lose some or all of your money. It seems that these clever people though investing in a bank was the same as depositing funds with the bank just with better returns.
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