Thank god we've got a PM who's a grown up again.
How was he involved? How did he help this situation?
The US also did it over the weekend. Kinda had to be done.
HSBC to Buy UK Arm of Silicon Valley Bank
71–80 of 156 posts
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#72Earlier quoted context omitted.
> It's said that no bank (even the best-managed) can withstand a fullscale bank run I keep reading this but this should not be true Any bank will hit liquidity issues on a full-on bank run, as not 100% of a banks assets will be marketable, but central banks will provide emergency liquidity in these situations But banks should not hit insolvency issues like SVB did
I think what made it worse here is that depositors of SVB were undiversified... If you had a bank that held deposits from various kinds of people, it's less likely that all of them would want their money out at the same time unless there was some of kind of widespread change in sentiment towards the overall financial system.
What made SVB even worse was that its customers were flush with VC cash and didn't need to borrow, so it looked elsewhere to make a return on the cash.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#73Earlier quoted context omitted.
What is “free money” and how does a big bank print money?
They acquired a bunch of client assets for 1 GBP. Those client assets will generate money for them in the long term. For HSBC this is a great deal. For the clients too, come to think of it. On Friday the future of their money was uncertain, whereas today they can relax a bit because a big bank is backing them.
Assuming of course clients don't fucking pull out the moment they can when svb uk reopens.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#74Earlier quoted context omitted.
You can't have a profitable bank that's insolvent. That doesn't make sense. The company has gone insolvent because it's no longer profitable.
banks are not 'normal' companies. Their Liabilities and assets outmatch their 'profit' by 100x. They could be making a handy profit yesterday and be bancrupt today because the market has moved. Normal companies can't go bancrupt in one day
I'm not sure you understand what's happening here or the basics of business and liquidation.
"Normal companies can't go bankrupt in one day" - They didn't go bankrupt. They went into liquidation. Massively different thing. You can have a company with billions of quid saved up in the bank that goes into liquidation.
Liquidation is quite common and happens daily in the UK to 'normal' companies. Companies that were profitable last week and no longer can operate as they're not profitable enough to pay their debts/what they owe.
I think your issue here is you don't understand what liquidation is/means and basic principles of business profits. The most important part is that while a company may be profitable at the 'end of year' -- They have to first get to the end of the year.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#75Great play by HSBC. It's very interesting because some banks will make out very nicely in the comming weeks and some will be dragged down a lot by the general pull of the market. HSBC already found some "free money" right away. I think at least one of the big US banks will also print some money (I'd bet on JPM).
The US regulators really frown on the big banks snatching up failed bank assets. They allow it when they have to but the median regulator driven take over is done by banks in the same tier as the one acquired.
I actually wonder if that’s why the uk arm of svb was able to be purchased but the US one wasn’t. It’s probably just the relative size differences but I’m curious if the fdic got no bids for svb or didn’t get any it liked.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#76Wasn't SVB UK fine and unaffected by events in US? In the sea of information about this, other than 'all is good', I didn't know UK branch was being taken over and sold as well.
Yes but its parent/owning company had gone bust. Lehman Brothers UK arm was also solvent (I think they had roughly £8B of assets after everything was wound up and the administrators bills were paid) but had no cash after the parent company went bust.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#77I read ARM... cognitive effects.
HSBC is buying the UK one of the arms of SVB. I wonder who buys the legs.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#78Earlier quoted context omitted.
You may be right, but the news coverage I've seen implies that the full backstop of all deposits regardless of size was announced because there is no buyer for SVB. Basically, there just wasn't enough time for buyers to feel comfortable with pulling the trigger.
Ah that's very possible. It makes sense their main objective was calming the market given other banks failing, committing ahead of time to finding a long term holder to the $90B mortgage security (in addition to the large set of stable depositor assets they held) was probably a much safer bet than the other options, regardless if a buyer fully committed to either asset group.
I’d guess (and it’s purely a guess) that it was their loan portfolio that made assessing their balance sheet hard to price. MBS’ and long term bonds can be priced using very standard techniques. Loans secured with startup equity warrants on the other hand are tough.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#79Re: HSBC to Buy UK Arm of Silicon Valley Bank
#80Earlier quoted context omitted.
They bought £5bn of assets and liabilities and bunch of admin work integrating it all. I highly doubt anyone is bothering to break out the champagne for this one - it is a rounding error at best. This isn't 4d giga brain chess stuff, its adults walking into the room. A meaningless tiny bank with assets and liabilities broadly matched has gone under - the regulator has stepped in, phoned around the market and somebody…
"We just got 3,000 new business accounts" feels like a good deal to me! Gotta open accounts somehow. And yeah, 80 million pounds of profit last year. I'd buy that for a dollar
"And yeah, 80 million pounds of profit last year. I'd buy that for a dollar"
In business, last years profits are often irrelevant. This is a good example. It's a constant treadmill of trying to stay profitable - which isn't as easy as it sounds.
More so when businesses of this size are usually built on owing large sums of money.