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SVB in talks to sell itself after attempts to raise capital fail

cnbc.com

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Re: SVB in talks to sell itself after attempts to raise capital fail

#21

Post by niij »

jpmattia wrote: post #11

I don't understand the incentive for a bank to buy them at this point, because any potential buyer might as well wait until the FDIC steps in to resolve the bank. Any banking wizards at HN who can explain the dynamics? edit: At the very least, FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow.

> FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow.

is there precedent for that?

Re: SVB in talks to sell itself after attempts to raise capital fail

#22

Post by cbayram »

dmix wrote: post #17
rickreynoldssf wrote: post #13

I'm feeling like this is early days of a disaster in Silicon Valley. We're at the first or second domino teetering right now. I hope a Sequoia or KPB will step up and save the bank, otherwise a lot of their portfolio investments are about to start missing payrolls.

I can't count how many times I've read similar comments on HN in the last 10yrs

Rising interest rates is what’s different this time around

Re: SVB in talks to sell itself after attempts to raise capital fail

#23

Post by RC_ITR »

jpmattia wrote: post #11

I don't understand the incentive for a bank to buy them at this point, because any potential buyer might as well wait until the FDIC steps in to resolve the bank. Any banking wizards at HN who can explain the dynamics? edit: At the very least, FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow.

The logic is as follows:

This is a liquidity problem (so far). This isn’t because loans went bad or anything, just that they needed cash quick and had to fire sale things (the things they took losses on were US Treasuries. Mostly.)

They still have a big loan book that is probably worth more than their liabilities.

A large player with liquidity could get those loan assets on the cheap if they agree to provide the short term capital liquidity (a reassuring name also probably stems any bank run risk).

Also the FDIC is pay in pay out insurance. The commercial accounts at SVB are in the hundreds of millions and no payments were made for those accounts. The FDIC probably won’t help.

Re: SVB in talks to sell itself after attempts to raise capital fail

#24

Post by crisdux »

jpmattia wrote: post #11

I don't understand the incentive for a bank to buy them at this point, because any potential buyer might as well wait until the FDIC steps in to resolve the bank. Any banking wizards at HN who can explain the dynamics? edit: At the very least, FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow.

I'm spitballing here but it could be an opportunity for another bank to expand into a new market and acquire new customers. SVB has a unique position in the market, as they specialize in catering to the financial needs of industries such as technology, life science, healthcare, private equity, and venture capital.

Re: SVB in talks to sell itself after attempts to raise capital fail

#25

Post by almost_usual »

jpmattia wrote: post #11

I don't understand the incentive for a bank to buy them at this point, because any potential buyer might as well wait until the FDIC steps in to resolve the bank. Any banking wizards at HN who can explain the dynamics? edit: At the very least, FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow.

Supposedly 150b funds are uninsured and they are already borrowing 15b from the fed which is as much as their capital.

https://twitter.com/FedGuy12/status/1634031134505066496

Re: SVB in talks to sell itself after attempts to raise capital fail

#26

Post by dannyw »

rr808 wrote: post #18
jpmattia wrote: post #11

I don't understand the incentive for a bank to buy them at this point, because any potential buyer might as well wait until the FDIC steps in to resolve the bank. Any banking wizards at HN who can explain the dynamics? edit: At the very least, FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow.

Its obviously risky. A year ago it had a market cap of $35B, if you can buy for next to nothing it could be worth it. Depends a lot if there is a big hole in the accounts and if the old customers come back.

At one point Peloton had a market cap of $60B; was that 35B real?

At this point, does SVB have positive brand value anymore, or are they negative?

Re: SVB in talks to sell itself after attempts to raise capital fail

#28

Post by stephen_g »

Interesting. Looking at their website, I don’t get how SVB was supposed to work. Retail and commercial banks (as opposed to investment banks) make almost all their money from lending, especially against fairly safe assets like real-estate, but SVB doesn’t seem to have a lot of those kind of lending products advertised. Successful banks have deposits just because they need the transfers coming in to keep up liquidity in the payment system, and because they’re involved in the mechanics of lending (actually created as part of lending, not actually “lent out” themselves). But they generally don’t actually make any serious money from having deposits themselves (because there’s no good way to do that in a way that is risk-free enough)…

The lending keeps money coming in (repayments), makes money (interest), etc. - so how was SVB supposed to make money and maintain liquidity without much of that?

Re: SVB in talks to sell itself after attempts to raise capital fail

#29

Post by [deleted] »

jpmattia wrote: post #11

I don't understand the incentive for a bank to buy them at this point, because any potential buyer might as well wait until the FDIC steps in to resolve the bank. Any banking wizards at HN who can explain the dynamics? edit: At the very least, FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow.

[deleted]

Re: SVB in talks to sell itself after attempts to raise capital fail

#30

Post by ejb999 »

jpmattia wrote: post #11

I don't understand the incentive for a bank to buy them at this point, because any potential buyer might as well wait until the FDIC steps in to resolve the bank. Any banking wizards at HN who can explain the dynamics? edit: At the very least, FDIC should issue a statement guaranteeing beyond the $250K/depositor limit sooner rather than later in order to stem some of the outflow.

why should the taxpayers be put on the hook for that?
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