Good summary, but SVB wasn’t undercapitalized even if they took no actions to plug the $1.8b hole. You can use their public capital ratio numbers and see that would only pull them down about 1.5% CET1, 0.75% leverage ratio, which would still leave them with significant capital buffers. Which makes the whole thing even stupider, they’d probably have been even better off without the capital raise which increased the panic.
Detailed explanation that addresses every aspect including LCR requirements. “ Not subjected to liquidity Reqs even though the 16th largest bank “ - what ??????? How is that even possible ????? What a shame indeed !
if Treasury/FDIC is competent, SVB assets will be auctioned over the weekend to some large buyer that can assume all uninsured deposits, assuming that buyer can HTM all of the assets...leaving equity with very little, and the C suite with multiple lawsuits to defend
Very interesting, thanks Marc. What stands out to me is how none of the IR risk was hedged in their securities portfolio. In European banks I've seen, this would have been captured through their structural hedge taking a full balance sheet perspective
This is the best explanation I’ve read.
Thanks,
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Good summary, but SVB wasn’t undercapitalized even if they took no actions to plug the $1.8b hole. You can use their public capital ratio numbers and see that would only pull them down about 1.5% CET1, 0.75% leverage ratio, which would still leave them with significant capital buffers. Which makes the whole thing even stupider, they’d probably have been even better off without the capital raise which increased the panic.
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Detailed explanation that addresses every aspect including LCR requirements. “ Not subjected to liquidity Reqs even though the 16th largest bank “ - what ??????? How is that even possible ????? What a shame indeed !
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You took a very complex topic and made it easy to understand. Thank you for writing.
Excellent analysis and informative. Huge take aways for Bankers as to "How one should not run any bank".
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Marc, great write up man! 👍🏾
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as a treasury profressional...incredible explanation.
Great reading for a Sunday afternoon, will be an interesting week .
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if Treasury/FDIC is competent, SVB assets will be auctioned over the weekend to some large buyer that can assume all uninsured deposits, assuming that buyer can HTM all of the assets...leaving equity with very little, and the C suite with multiple lawsuits to defend
“If”!
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Very interesting, thanks Marc. What stands out to me is how none of the IR risk was hedged in their securities portfolio. In European banks I've seen, this would have been captured through their structural hedge taking a full balance sheet perspective
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great article. one of your best. v insightful
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This is really best article on SVP. Thank you.
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Extremely thorough. Thanks for the enlightening article
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How good is this summary. Thanks.
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great article!
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best article written thus far
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