Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

cnbc.com

Post reply on HN
Print view View original

51–60 of 310 posts

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

#51

Post by nemo44x »

aliljet wrote: post #41

Very curious to understand how this works. For all intents and purposes, if the bank was unable to raise capital, it is at least nominally bankrupt. What value would another entity find in a bank that has failed? To be fair, the government may find value in shoring this bank up. That's a different story. The bank will be essentially nationalized at that point.

They have assets they could sell for a loss or they could sell to someone with liquidity that doesn't have to sell those assets. The buyer also gets the SVB business which is really unique and great - a true asset in itself. This is a better outcome for SVB share holders as they get some value.

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

#52

Post by nemo44x »

jpmattia wrote: post #46
RC_ITR wrote: post #23

Earlier quoted context omitted.

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 shor…

> This is a liquidity problem (so far). How is that known currently? Edit: As opposed to a solvency problem?

Because they sold long term bonds for a huge loss so they could create liquidity.

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

#53

Post by ejb999 »

jpmattia wrote: post #50
ejb999 wrote: post #30

Earlier quoted context omitted.

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

> why should the taxpayers be put on the hook for that? One reason that it was done in the past was because it saves the taxpayers money by bailing out a single meltdown rather than something systemic. But you should recognize: The taxpayers back up the FDIC, but singleton meltdowns are paid out of the insurance fund, which is paid into by the banks themselves. As long as that fund does not get exhausted (ie a system…

and then makes the next failure even more likely - companies will take on more and more risks if they know they will be bailed out.

I for one am tired of privatizing the profits, and socializing the losses.

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

#56

Post by pyrale »

jpmattia wrote: post #44
alex_young wrote: post #33

Earlier quoted context omitted.

The current limit is the result of such action in 2008: https://archive.fdic.gov/view/fdic/3388

They went beyond it for several banks: To my knowledge, nobody lost money in the dozens of banks that the FDIC closed in the 2008 meltdown, despite several depositors being beyond the FDIC limits.

Did they even have that power in 2008? I remember they issued a statement about how they could have avoided losses for creditors, had they properly liquidated Lehman Brothers [1].

[1]: https://www.fdic.gov/regulations/reform/lehman.html

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

#57

Post by jpmattia »

nemo44x wrote: post #52
jpmattia wrote: post #46

Earlier quoted context omitted.

> This is a liquidity problem (so far). How is that known currently? Edit: As opposed to a solvency problem?

Because they sold long term bonds for a huge loss so they could create liquidity.

I meant as opposed to a solvency problem (edited above.)

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

#58

Post by calpaterson »

ejb999 wrote: post #30
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?

The FDIC isn't funded from general taxation, it's funded by a specific levy on banks.

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

#59

Post by flyinglizard »

ejb999 wrote: post #53
jpmattia wrote: post #50

Earlier quoted context omitted.

> why should the taxpayers be put on the hook for that? One reason that it was done in the past was because it saves the taxpayers money by bailing out a single meltdown rather than something systemic. But you should recognize: The taxpayers back up the FDIC, but singleton meltdowns are paid out of the insurance fund, which is paid into by the banks themselves. As long as that fund does not get exhausted (ie a system…

and then makes the next failure even more likely - companies will take on more and more risks if they know they will be bailed out. I for one am tired of privatizing the profits, and socializing the losses.

The entire financial system is built on trust and stability. When a bank is rescued its shareholders suffer (by selling at a loss, nationalization, whatever). It’s not a positive outcome for them, but rescuing a bank has big implications for systematic stability.

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

#60

Post by jejeyyy77 »

bratao wrote: post #5
dannyw wrote: post #3

How is it possible for SVB to not have a bank run at this point?

I think that very soon they will halt withdraws. Everyone I know already did it or is doing today. Many only had a SVB account, and need some time to open another account to transfer it. (International Startups)

Literally transfer the money anywhere at this point.
Post reply on HN