2 years ago
Quick Take
A abbreviated timeline connected what has happened to Silicon Valley Bank (SVB) and whether determination is much contagion coming:
- SVB saw its deposits detonate during the bubble of 2020, from $62 bn astatine the extremity of 2019 to $189 bn astatine the extremity of 2021.
- Due to 0% short-end rates, these firms went into long-duration investments (10+ twelvemonth duration), arsenic they could not make the output indispensable connected the deposits.
- As the enslaved bubble burst, the worst enslaved show successful implicit 100 years, they faced monolithic unrealized losses.
- These unrealized losses became realized losses astatine $1.8bn and needed to rise different $2.25bn successful equity and debt.
- Bank tally began arsenic relationship holders cashed retired balances supra $250,000 (FDIC security threshold)
- Credit agencies person chopped SVB’s ratings.
- Pressure has present dispersed to each U.S. banks that saw implicit $80 cardinal wiped retired successful the marketplace cap.
- As a result, SVIB dropped 60% connected March 9, with a further 24% pre-market
- While the CEO of SVB scrambles to reassure clients, wherever person we that before?
The station Is SVB to large to fail? Will it get rescued? Bill Ackman already calling for bail-outs appeared archetypal connected CryptoSlate.
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