SVB collapse

GazzaBloom

Was a lot of this drop auto bot trades, stop losses, options etc? I read somewhere that up to 60% of daily market moves are automated, not sure how true that is.

I suspect the answer to whether it's a storm on a teacup or a contagion depends on how honest the big global banks are being with their balance sheets, if they are holding billions in bonds that they are not showing the true current value of then that would be a problem if deposits dry up and they had to sell these bonds at a loss which would fail to meet outflows

Adyinvestment

I didn't realise there was a UK arm to SVB, seem the UK FSCS will be needed, with a lot of UK tech start ups liquidated.

https://news.sky.com/story/bank-of-london-weighs-rescue-bid-for-uk-arm-of-silicon-valley-bank-12830933

dale_cotterill

Going to be a big problem for regulators and governments. The pressure is going to be on to guarantee all deposits, regardless of any limits.

It already seems that SVB have run their business on a 'too big to be allowed to fail' basis on the assumption that the US Govt would bail out depositors if they got it wrong because it would be too unpopular not to.

DannyCarey

buckle up..

Nebulous2

They campaigned successfully for reduced regulations, on the basis they had a low risk profile. 

Silicon Valley Bank chief pressed Congress to weaken risk regulations | Banking | The Guardian

Gary1984

It seems crazy if there isn't some sort of concentration of risk stress testing required where you check what happens if all clients in a particular sector are adversely hit at once. Maybe there was but the test wasn't severe enough. Any bankers here?

Edit: the article linked above suggests not much stress testing required until it his 250bn of assets. Not considered big enough for proper regulation but still large enough to worry markets when it fails apparently.

arnoldy

In many countries, UK included, the potential bloodbath is draining of money from small banks to short term government funds or to the big "systemically important banks" - aka Lloyds, NatWest, Barclays, Standard Chartered. Many of the smaller banks were recommended for their high savings rates on advice sites, including MSE. Of course the £85k protection applies. Rates will go up again soon - and quite rightly - to tame the inflation monster. That will put further pressure on bonds and mortgage rates of 6-8% will feed through to house prices. 

All because we got excessively drunk and disorderly on low interest rates over the last 20 years and a reluctance to have a recession(s) that would have actually been preferable to what we are facing. I hope this time we keep raising rates and turn our back on the last 20 years of low rates, deficits and  money printing. 

User232002

SVB failed because;

(1) Bonds bought during the past decade+ of record low interest rates have declined in (current) value as interest rates have risen sharply in the last year, and

(2) These bonds had to be marked to market because of a customer run on the bank because in our fractional reserve banking system no holder of deposits (ie. a bank) actually possesses those deposits on hand.

So, the real question is, do you think either of these two problems are unique to SVB? 

Albermarle

mark_cycling00 said:

Monday midday could be a good trough to buy into.

Just after the "I'm getting out now!" Posts on here...

I would guess the trough might be a bit earlier, around 10.00.

Sea_Shell

Potentially great news for those in the accumulation stage. 😎

Not so great for those in the deaccumilation stage. ☹️



I can guess the answer to that in my virtual sealed envelope ✉️ 😉

Who's going to win the prize?