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Silicon Valley Bank Collapses
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AndyBeez:
British perspective. London Stock Exchange public listed (PLC) share holdings with exposure to SVB's 'liquidity issues'. Some notable brands mentioned including Oxford BioMedica, Music Magpie, Trust Pilot and Moon Pig

Shares Magazine: London listings with exposure to Silicon Valley Bank
https://www.sharesmagazine.co.uk/news/market/1678709915961551900/summary-london-listings-with-exposure-to-silicon-valley-bank-


Sure Money === Sure Risk
SiliconWizard:

--- Quote from: imo on March 13, 2023, 11:39:35 am ---Printing money is easy. All banks saved and a BigMac will cost $300 soon..

--- End quote ---

No problem, that will be Russia's fault. People will be starving but happy to have someone to hate.
 ::)
Gyro:

--- Quote from: dave j on March 13, 2023, 04:16:48 pm ---
--- Quote from: coppice on March 13, 2023, 03:28:29 pm ---It looks like HSBC are grabbing the UK arm of SVB. They have quoted healthy figures for that business, but buying it for one pound doesn't make it sound too healthy.

--- End quote ---
SVB UK weren't in a position to haggle on price - the Bank of England had already decided to rule them insolvent. With the customers about to have financial problems and the markets in panic mode having someone like HSBC buy it for a nominal amount meets both protect the customers and calm the markets objectives all without the UK government having to spend a penny. Wins all round (apart from for SVB owners) as far as the UK government are concerned.

--- End quote ---

Yes, HSBC bought the UK arm for £1, injected a bunch of money (the HSBC boss said how much on the 6pm news interview but I can't see it in the story) and they opened for business as usual at 9AM.

https://www.bbc.co.uk/news/business-64937251
ejeffrey:

--- Quote from: nctnico on March 12, 2023, 10:12:30 pm ---
--- Quote from: coppice on March 12, 2023, 10:09:32 pm ---I found it interesting that so many companies in one area had a large part of their cash holdings in the same place. Don't these people know what SPOF means?

--- End quote ---
I agree. Even a Dutch company had tens of millions of pounds and dollars at that bank. If you do business like that, you'd at least choose a big bank that is financially healthy. But maybe the beancounters thought it was a better idea to choose a small bank with lower costs over financial security... Penny wise, pound foolish.

--- End quote ---

SVB was one of the top 20 commercial banks in the US.  It's not nearly as big as the top 5, but it's way bigger than most local and regional banks.  They just largely didn't have a consumer presence so they aren't a household name like bank of america.


--- Quote ---The proximate cause of SVB's failure was an old-fashioned bank run, after depositors became worried about the bank and many withdrew funds immediately.
Today's New York Times business section had an article suggesting that the run was exacerbated by the depositors' being members of the tech community who spent much of their time online, thus spreading the fear quickly.
Their fear was possibly an overreaction to normal business activities by the bank that were communicated badly to the public.

--- End quote ---

It definitely looks like that played a part, although it also appears to have an element of good old fashioned yield chasing.  The news that triggered the bank run was that they were forced to sell a fairly large chunk of long-term bonds at a loss.  Rising interest rates (and the corresponding loss in value of long term bonds with lower yield) were widely expected by everyone and projected by the federal reserve well in advance, so it's hard to say how much of that was reckless investing vs. mass hysteria.  I don't think the full extent of their holdings is well understood or reported, so it isn't clear if they would have been mostly OK without the shock, or if they were just a collapse waiting to happen.
MT:
The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&l Industry; By William K. Black
https://law.umkc.edu/profiles/faculty-directory/william-k-black.html

https://www.amazon.com/Best-Way-Rob-Bank-Own/dp/0292754183

In this expert insider’s account of the savings and loan debacle of the 1980s, William Black lays bare the strategies that corrupt CEOs and CFOs—in collusion with those who have regulatory oversight of their industries—use to defraud companies for their personal gain. Recounting the investigations he conducted as Director of Litigation for the Federal Home Loan Bank Board, Black fully reveals how Charles Keating and hundreds of other S&L owners took advantage of a weak regulatory environment to perpetrate accounting fraud on a massive scale. In the new afterword, he also authoritatively links the S&L crash to the business failures of 2008 and beyond, showing how CEOs then and now are using the same tactics to defeat regulatory restraints and commit the same types of destructive fraud.

Black uses the latest advances in criminology and economics to develop a theory of why “control fraud”—looting a company for personal profit—tends to occur in waves that make financial markets deeply inefficient. He also explains how to prevent such waves. Throughout the book, Black drives home the larger point that control fraud is a major, ongoing threat in business that requires active, independent regulators to contain it. His book is a wake-up call for everyone who believes that market forces alone will keep companies and their owners honest.
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