Can someone ELI5 what this is about? I know that another bank is going through some trouble and I’m assuming this is somehow connected? Or not?
I am unfamiliar with this bank or this form.
First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
31–40 of 237 posts
Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
#32[deleted]
Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
#33I’m not super well informed about this space, but my understanding was that SVB’s issue wasn’t that its depositors were from the tech sector, but rather that it had put a ton of capital into investments that are significantly less valuable (on the open market today) now than they were a year ago due to increasing interest rates. I’m curious how the tech sector matters here specifically?
Why are banks even allowed to buy assets? Every asset is a risk. Banks should have right to do exactly two things. Keep their customers saving and issue loans. There's plenty of risks even in that activity. Every other thing bank does is just piling up risk to unreasonable levels.
Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
#34> The investment portfolio is less than 15% of total bank assets. Of this, less than 2% of total bank assets is categorized as available for sale. Is 2% good or bad?
Depends who is asking and when they ask. When there's a run, 2% is clearly bad for depositors wanting their cash back. When times are good, the banks investors want capital working as hard as possible to low available assets (usually) means more profit.
Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
#35Can someone ELI5 what this is about? I know that another bank is going through some trouble and I’m assuming this is somehow connected? Or not? I am unfamiliar with this bank or this form.
Contagion. People are nervous that other banks are as insolvent as SVB. And even if those banks aren’t, nervous people making a bank run could replicate this. And if another bank falls, then another it would increase velocity and spread more rapidly until every bank is wiped out.
Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
#36I’m not super well informed about this space, but my understanding was that SVB’s issue wasn’t that its depositors were from the tech sector, but rather that it had put a ton of capital into investments that are significantly less valuable (on the open market today) now than they were a year ago due to increasing interest rates. I’m curious how the tech sector matters here specifically?
Why are banks even allowed to buy assets? Every asset is a risk. Banks should have right to do exactly two things. Keep their customers saving and issue loans. There's plenty of risks even in that activity. Every other thing bank does is just piling up risk to unreasonable levels.
"Issuing a loan" and "buying debt" are the same thing in different words. Issuing a loan is still, in effect, buying an asset.
Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
#37Hopefully the panic will not spread. Multiple people were calling me to ask whether they should get their money out of their bank. But keep in mind that people also went through a pandemic, where panic was the go-to option.
> Multiple people were calling me to ask whether they should get their money out of their bank
Should we? At minimum keep as close to $250k or less spread across however many banks as practical, right now.
Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
#38The fact that they filed a last minute report on a Friday night speaks volumes about the amount of withdrawals they must be experiencing. This is about as strong as a signal they could put out to stop a possible run.
Another interpretation is that this is generally how the FDIC likes to do things: take over on Friday and reopen on Monday. Not sure that will happen in this case but the regulators get two days to prepare to reopen, which at least in recorded US history is seamless and without risk for retail depositors.
Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
#39I’m not super well informed about this space, but my understanding was that SVB’s issue wasn’t that its depositors were from the tech sector, but rather that it had put a ton of capital into investments that are significantly less valuable (on the open market today) now than they were a year ago due to increasing interest rates. I’m curious how the tech sector matters here specifically?
Why are banks even allowed to buy assets? Every asset is a risk. Banks should have right to do exactly two things. Keep their customers saving and issue loans. There's plenty of risks even in that activity. Every other thing bank does is just piling up risk to unreasonable levels.
What's really the difference between issuing a loan and buying the same loan issued by someone else?
SVB bought a load of treasury bonds which is equivalent from a risk perspective from issuing a 10 year (or whatever) loan to the government, right?
Re: First Republic Bank files 8-K – Tech only 4% of total deposits; no sector >9%
#40In general, if anyone wants to go through all the recent 8-K filings, this is what SEC EDGAR is for. Here's a link that'll bring up all recent 8-K filings by date and time, descending: https://www.sec.gov/cgi-bin/browse-edgar?action=getcurrent&d... In general, I would expect a ton of 8-Ks on Monday the 13th for companies to release information on their exposure to SIVB, particularly if their exposure is minor or non-…
Thanks for that. I find it interesting that so many of the companies filing SVB-related 8-Ks (even if to say "we have no/minimal deposits with SVB") are biotech/pharma. Traditional tech gets most of the attention, but SVB has been the Bay Area's biotech banker as much as anyone else, and thanks to its specialized wine practice is probably even more dominant in that sector.