Forbes called this bank great just 4 days prior to this collapse and the CEO had taken advantage of the impending doom a week ago. .... The credibility of Forbes has gone to the dogs.
In 2008 just two days before the collapse of lehman brothers,rating agencies like S&P and Moodys gave triple A rating s to mortgage backed securities issued by Lehman..this isnt new,their system is just as crappy as anyother's.
Mr. Narisimhan talked with great control over his choice of words & sentence formation & presenting statements & giving short & extreme brief analysis. Very good & objective assessment.
I think this is a golden opportunity for Hindenburg to support SVB thereby strengthen domestic economy and to expressed his dedication towards own country/economy.
This man is a tight rope walker. Very brief, cautious and precise. It will be interesting how he will take this forward. Curious to have him serialising this issue with regular updates as they unfold. Lots of deep minds are getting busy on this and the trajectory looks unpredictable. In banking and finance no lesson is learnt enough except that each time the gamers take the play into the next level. This is another high quality episode after the one from Dr Ankit Shah. Jai Hind!
Hindenburg is a private entity making money out of their predictions. No need for one entity to predict everything. BTW this will not be the last bank. The interest rates have gone up too fast in a short time. Many banks who made long term bets early during the pandemic are going to have a difficult time.
Several cash outs by the management and directors occurred in days just prior to the shutting down of SVB. Imagine if Adani had sold stock, how the lobby would have raised hell and said Modi took out cash.
Thank you Mr Sri Narasimhan,explained with great clarity and analysis,with hunches that resonates with many of us here in Silicon valley.Wish you could mentor my son who's is starting in Fintech as fresh college graduate🙏😄.We need to watch the narratives,esoecially by media, which might be blown out of proportion. Thank you Mr Sree Iyer.Always spot on querries,analysis and answers!
NOTE: Sri Narasimhan misspoke as he referred to the US Debt / US GDP Ratio as Basis points instead of Percentages. To be clear it is 250 percent, ie 2.5X the GDP! He apologizes for this slip.
Fantastic!! Thanks to both the Sris for putting up a wonderful brain stormer on what happened, whats happening and what to expect with respect to the SVB!! Wonderful to have Sri Narasimhan one more bright minds into our PGurus fold!! thanks again!!
Wonderful analysis and surprising to see how come Hindenburg couldn't pick this up. Possibly they will also give out a report on this bank and the state of more other companies in Silicon Valley. The reports would really help a lot of traders in the financial markets
An eye opener for people like me who has no idea about the banking structure and other technical stuff in the US and Sri Narsimhan ji explained it like cake walk. I appreciate p gurus for brining such erudite part of the society to enlighten issues with absolute integrity no propaganda. Also his appeal to observe the variety of narratives and also Iam excited about his take on the Hindenburg Adani thing. I am waiting for more sessions from Narasimhanji. I am proud to be your subscriber iyerji...........
SVB was in effect facing Asset-Liability mismatch.If a new buyer puts in money to take care of the shortfall in liquidity, the Bank can be revived. Very silly and unprofessional of such large sized bank to ignore this trend. How could they park their short term funds in long term bonds? And to sell them in bond market at loss meant disaster. Do these fellows knew even the fundamentals of banking?
he FDIC, in a statement, said as of December 31, 2022, the Silicon Valley Bank had approximately USD 209.0 billion in total assets and about USD 175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined.
I am a doctor and very difficult to understand this financial matters though it sounds interesting, please make a video using simple terms so that laymen like me can understand
Here is a layman's explanation as I understand what happened: SVB got huge amount of money from depositiors in a short span of less than 2 years. Bank could not lend as much money as it was receiving. So it started buying Treasury notes , aka printed money. Interest rates were low, so the bond yield was miniscule on its treasury holdings. Then COVID pandemic happened. People were forced to stay home and Government paid them while they stayed home. That extra money in circulation means inflation started its head. To control inflation, the Feds started raising interest rates. In effect, new Treasury notes started paying more than what SVB was getting from its holding of notes. So depositors decided they can have better return on their money elsewhere. They made bank run. Huge amount of money walked out from SVB. Bank could not keep up with withdrawal demand. SVB Stock tanked. Feds moved in and took control of the bank. What happens next? All depositors will get up to $250,000 of FDIC insured deposits per account. If a depositior holds more money in his account, he will get a certificate. What is that certificate worth? Depending on how much FDIC collects from bank asset liquidation, that certificate holder may get some money in future. Not a surity. Why? Vulture effect sets in. Influentioal depositors will be in the front of the line. Then there are real vultures - Wall St. liquidators, real lawyers, and bureacratic inefficiency. Will SVB collapse have ripple effect? Wait till Monday morning when markets open. Wells Fargo, BoA and other banks have already started getting shellacking. Foreign markets will also start giving previews of what is coming starting Sunday evening US time.
Same thing with me especially served Gvt, Had fixed income & tried to save for the family in the good old systems of "saving " Through GPF ,etc ,this is a little Greek &,Latin for me
@@rajalakshmiradhakrishnan5343 Banks also operate just like an Individual does. India earns - X. saves some portion of X, invests that X in deposits or shares or land or..etc., and also borrows eual or more by hedging (mortgage) those securities (investments). Suddenly the value of invested components (say land or invested companies collapse) go valuation drain to the extent that all his savings are lost. He goes bankrupt i.e. savings of say 40 years is lost or has zero value now.
Banks also operate just like an Individual does. India earns - X. saves some portion of X, invests that X in deposits or shares or land or..etc., and also borrows eual or more by hedging (mortgage) those securities (investments). Suddenly the value of invested components (say land or invested companies collapse) go valuation drain to the extent that all his savings are lost. He goes bankrupt i.e. savings of say 40 years is lost or has zero value now.
Too good. Getting USA financial market information and analysis live as it is happening is empowering us sitting in Bangalore. Great service P guru.. We are blessed with your wisdom of thorow international knowledge. Thanks a lot.
I am in California and have never heard name of this bank, and I am not alone. This bank had a very precise niche of business and mostly associated with start up culture. Most of the personal deposits were also from executives of startups. So it is basically an isolated event.
Very good clarification provided by Sri Narasimhan on his debut in this channel! Upon failure of SVB several rumours started flying around which made one to wonder what exactly resulted in the collapse of this otherwise respectable financial institution. It's understood that mis match of assets and liabilities was the major factor. One only wishes this does not result in a contagion effect around rest of the world which already is battling many domestic issues due to war in Ukraine.
Finally! Good to see that Sri is bringing in experts rather than asking abhijit. Abhijit has no expertise in finance or economics & makes a lot of crappy statements regarding them
*SVB's Paradox: Mar 6 SVB gets Forbes' Best Banks Ranking and Internal Collapse 2-3 days later.* While SVB may be one of the VC Banks in SF, at least 50% of US venture-backed tech and life sciences firms had banking relationships with SVB, according to the bank's website. SVB had a large exposure in China too. Several Indian startups, too, have deposits in SVB and investments from the bank.
Sri Narasimhan had made it so simple that the Run on the liquidity of cash is because of the Interest rate inversion. He also confirms that USDC and Tether are fully backed up by assets. Why Regulators had swiftly acted to take control of SVB?
This is a great explanation seen on RUclips so far on SVB. Just want to put a few things that are my understanding of this. I guess the republicans took a better grip in mid term US elections this irked Biden administration to target the Indian origin NRI's. I heard that the H1B visa wait time is made further long and increased its price to 800$. They are targeting voters mainly on Indian origin. I know Mr Iyer sir can give us much elaborate discussion happening in US politics! Thank you, Vijay Rao
The thing is we all knew interest rates will rise since inflation shot up over 8% As a bank, why didn't they prepare for this situation. I would expect they would know how bonds work.
As per the rating given by Forbes in this week(4days back) Forbes also lined with hindenberg for circulating fake toolkits ..it is a slap for soros toolkit gang …before coming to conclusion in to belief by any agency ratings look in to the confidence of business of firms
Higher the returns, higher the risks. Even Citi could not miss the whirlwinds of sub prime crisis in 2008. The so called credit rating companies do only post mortem work. The buck stops with the management. Does US miss the ideal advises of prudence like Sundaram Finance or Cholamandalam Investment of South India.
In SVB case, it was miniscule return with higher risk. Bank is holding huge chunk in lower yield treasury notes. Selling those notes in current market means, taking huge bath on liquidation of those printed money. Hanging on to those notes till maturity means not enough money for depositors who are making a run.
In this case SVB is offering only 0.48 % in checking accounts, however the short term (less then 1 year) risk free asset class offering 3.5 - 4 pc and people are very smart to pull their money and invest in risk free short term assets . The problem is banks are offering negligible rates
For the non finance people,l to understand, please include a quick primer on why bond value falls when interest rate goes up.that will help people understand the problem in its entirety.
When Interest rates go up, bond holders will sell their existing bonds and enter into new bonds to get higher interest rates (coupon). Hence the price of the existing bonds which were offering lower interest (coupon) go down. This interest rate risk is very high on long term bonds. Hope this clarifies your doubt
One clarification - when bond prices fall, is there an impact if they don’t sell at a loss - simply hold it to maturity? SVB was forced to sell because of the dual impact of inflation - if you hold it to maturity, you will get (effectively) 50 percent at maturity.
Anyone ( individuals or organizations) living beyond his/her/its means will face similar situations. Western economists brought in the concept of the credit economy making every citizen a debtor, proving costly for people every time such unfortunate developments occur. Those who invested believing in the western corporate governance model will, unfortunately, have to face the brunt of such massive failures. Where are those Hindenberg type research organizations? They could not foresee the massive failures of financial institutions nearer home; instead, they were interested to cook up stories of organizations situated far away for some gains.
This looks like an ALM mess-up due to failure of thr ALCO and Risk Management team...residual maturities of assets and liabilities in various time-buckets....!- Bala
Mr. Iyer, I support the cause you vouch for. But I have a humble suggestion. It’s one thing to have podcasts that could be 30-45 minutes, but when you have programs otherwise, you need to be brief. Else you won’t hold viewer interest.
The whole ranking/ rating model is flawed and biased. Just few days back Forbes magazine rated SVB as it's top 5 pick. This nosedive of west's crediblity is truly spectacular.
The root cause is different this time. *Here is the de$ perspective:* -world stop buying USTs since Jan 2022 -this leads to inflation turning inwards within the US -Powell is forced to raise rates to tame inflation -high interest rates is what led to the collapse The 2008 Lehman moment was solved by the government (1)arranging bank mergers (2) $700 bn bailout package. (1) will happen this time around (2) will lead to even more inflation, so this doesn't look like a reasonable option this time around
Some Pawana muktaasan fellows in Bharat also suggested/insisted PM Modi to print and freely distribute money to the poor people during the pandemic...Remember?
Sree Iyerji, You talk about Bitcoin as not asset based but what about other ones like Ethereum? I hope you can give your thoughts in the next one with clarity.
Few questions- -How can long term bonds be invested out of short term / on call customer deposits that too in an increasing interest climate - even at personal level bond placements i never look beyond 3/5 yrs and go for secondary market buying with a 3/5 yr maturity under this rising interest scenario - the rating is a positional rating and sustainability of profitability / liquidity is a question mark. How can rating agency not red flag the long term bond placement from short term funds? - india start ups may look for alternate fund option route as the modi govt is fleetfooted in their ddcision making, they may rope in stop gap funding quickly. Rgs. Dr durgadoss
Indian startups makes the distinction between debt and equity-based investments to explain SVB's collapse's impact on Indian firms. Companies that got equity-based investments would have already received the investment amount, leaving little to no risk. But the risk is significant for firms with a debt-based investment from SVB. For investments in the form of debt, the money would have been parked in SVB, leaving it stuck after the bank's collapse. Multiple Indian startups have their money stuck in SVB, the most serious being the ones operating in the US. If they have been working mostly in India, they would have funds parked in Indian banks too. The problem is magnified for startups that have SVB as the only main banking partner.
Forbes called this bank great just 4 days prior to this collapse and the CEO had taken advantage of the impending doom a week ago. .... The credibility of Forbes has gone to the dogs.
Forbes … & the like rating agencies are easily manageable to one’s advantage
In 2008 just two days before the collapse of lehman brothers,rating agencies like S&P and Moodys gave triple A rating s to mortgage backed securities issued by Lehman..this isnt new,their system is just as crappy as anyother's.
Rank student failed in exam
Mr. Narisimhan talked with great control over his choice of words & sentence formation & presenting statements & giving short & extreme brief analysis. Very good & objective assessment.
I think this is a golden opportunity for Hindenburg to support SVB thereby strengthen domestic economy and to expressed his dedication towards own country/economy.
This man is a tight rope walker. Very brief, cautious and precise. It will be interesting how he will take this forward. Curious to have him serialising this issue with regular updates as they unfold. Lots of deep minds are getting busy on this and the trajectory looks unpredictable. In banking and finance no lesson is learnt enough except that each time the gamers take the play into the next level.
This is another high quality episode after the one from Dr Ankit Shah.
Jai Hind!
Yup, and it's what ankit Shah predicted
What is your afdvise to those who bank with SVB
May be there was some misjudgement and over confidence
Quite true
I wonder why Hindenburg didn't warn about Silicon Valley Bank
Hindenburg is a private entity making money out of their predictions. No need for one entity to predict everything.
BTW this will not be the last bank. The interest rates have gone up too fast in a short time. Many banks who made long term bets early during the pandemic are going to have a difficult time.
They are Too busy with India, Adani,& Modi to care about SVB.
😂😂 Because George Soros was targeting Modi and Adanai alone.
Several cash outs by the management and directors occurred in days just prior to the shutting down of SVB.
Imagine if Adani had sold stock, how the lobby would have raised hell and said Modi took out cash.
Why would they
Simple and great analysis by Sri Narasimhan. Another good asset to PGuru collection of financial experts.
Thank you Mr Sri Narasimhan,explained with great clarity and analysis,with hunches that resonates with many of us here in Silicon valley.Wish you could mentor my son who's is starting in Fintech as fresh college graduate🙏😄.We need to watch the narratives,esoecially by media, which might be blown out of proportion.
Thank you Mr Sree Iyer.Always spot on querries,analysis and answers!
You're most welcome
Yl
जय श्री कृष्ण 💐🙏
NOTE:
Sri Narasimhan misspoke as he referred to the US Debt / US GDP Ratio as Basis points instead of Percentages. To be clear it is 250 percent, ie 2.5X the GDP! He apologizes for this slip.
Fantastic!! Thanks to both the Sris for putting up a wonderful brain stormer on what happened, whats happening and what to expect with respect to the SVB!! Wonderful to have Sri Narasimhan one more bright minds into our PGurus fold!! thanks again!!
Beautifully explained and clarified by Narasimhan ji ... Thanks Shree Iyer for bringing him in .. Wow and Hats Off 👍👍
Thanks a lot
Narasimhan very gòd debut very controlled choosy about words and expressions welldone welcome.
Enjoyed Sri Narasimhan's take on the matter. Please return with more gems🙏🏻
Thanks to Sri IyerJi for bringing SriNarasimhan. You should do more episode with him. He is a good addition to pgurus channel.🙏🙏🙏
Best explanation yet on the issue. Sri Narsimham ji has cleared many doubts.
Its just another Indian brilliant mind Sree Ji . Thanks .
Wonderful analysis and surprising to see how come Hindenburg couldn't pick this up. Possibly they will also give out a report on this bank and the state of more other companies in Silicon Valley. The reports would really help a lot of traders in the financial markets
An eye opener for people like me who has no idea about the banking structure and other technical stuff in the US and Sri Narsimhan ji explained it like cake walk. I appreciate p gurus for brining such erudite part of the society to enlighten issues with absolute integrity no propaganda. Also his appeal to observe the variety of narratives and also Iam excited about his take on the Hindenburg Adani thing. I am waiting for more sessions from Narasimhanji. I am proud to be your subscriber iyerji...........
Same with me sir. I am zero in banking knowledge. But. I can understand the logic
SVB was in effect facing Asset-Liability mismatch.If a new buyer puts in money to take care of the shortfall in liquidity, the Bank can be revived. Very silly and unprofessional of such large sized bank to ignore this trend. How could they park their short term funds in long term bonds? And to sell them in bond market at loss meant disaster. Do these fellows knew even the fundamentals of banking?
Good comment.
he FDIC, in a statement, said as of December 31, 2022, the Silicon Valley Bank had approximately USD 209.0 billion in total assets and about USD 175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined.
Dharmo Rakshathi Rakshithah
The bank advisor must have been new age liberal woke...Virus infected individual.
@@krishsri7164Hare Krishna
Shree sir isn't the system rotten everywhere and not just in India.
Yes true ! But the west talks only about India as if everything is wrong in India and everything is right in the West !
An excellent analysis.
We had Harvard PC s who were advising India to print more notes during Covid pandemic like USA.
😂harvard
I am a doctor and very difficult to understand this financial matters though it sounds interesting, please make a video using simple terms so that laymen like me can understand
Here is a layman's explanation as I understand what happened:
SVB got huge amount of money from depositiors in a short span of less than 2 years.
Bank could not lend as much money as it was receiving.
So it started buying Treasury notes , aka printed money.
Interest rates were low, so the bond yield was miniscule on its treasury holdings.
Then COVID pandemic happened.
People were forced to stay home and Government paid them while they stayed home.
That extra money in circulation means inflation started its head.
To control inflation, the Feds started raising interest rates.
In effect, new Treasury notes started paying more than what SVB was getting from its holding of notes.
So depositors decided they can have better return on their money elsewhere.
They made bank run.
Huge amount of money walked out from SVB.
Bank could not keep up with withdrawal demand.
SVB Stock tanked.
Feds moved in and took control of the bank.
What happens next?
All depositors will get up to $250,000 of FDIC insured deposits per account.
If a depositior holds more money in his account, he will get a certificate.
What is that certificate worth?
Depending on how much FDIC collects from bank asset liquidation, that certificate holder may get some money in future.
Not a surity.
Why?
Vulture effect sets in.
Influentioal depositors will be in the front of the line.
Then there are real vultures - Wall St. liquidators, real lawyers, and bureacratic inefficiency.
Will SVB collapse have ripple effect?
Wait till Monday morning when markets open.
Wells Fargo, BoA and other banks have already started getting shellacking.
Foreign markets will also start giving previews of what is coming starting Sunday evening US time.
Same thing with me especially served Gvt,
Had fixed income & tried to save for the family in the good old systems of "saving "
Through GPF ,etc ,this is a little Greek &,Latin for me
@@rajalakshmiradhakrishnan5343 Banks also operate just like an Individual does. India earns - X. saves some portion of X, invests that X in deposits or shares or land or..etc., and also borrows eual or more by hedging (mortgage) those securities (investments). Suddenly the value of invested components (say land or invested companies collapse) go valuation drain to the extent that all his savings are lost. He goes bankrupt i.e. savings of say 40 years is lost or has zero value now.
Banks also operate just like an Individual does. India earns - X. saves some portion of X, invests that X in deposits or shares or land or..etc., and also borrows eual or more by hedging (mortgage) those securities (investments). Suddenly the value of invested components (say land or invested companies collapse) go valuation drain to the extent that all his savings are lost. He goes bankrupt i.e. savings of say 40 years is lost or has zero value now.
Too good. Getting USA financial market information and analysis live as it is happening is empowering us sitting in Bangalore. Great service P guru.. We are blessed with your wisdom of thorow international knowledge. Thanks a lot.
Wonder where are the ' Hinderburg ' reporters on this ?? 😂😂
hats off toP gurus Sri ji & narasimhan ji...too diplomatic & decent in details....but wonder at what abt predictions if famous economists
This is what India has learnt and took appropriate actions in the meantime!
I am in California and have never heard name of this bank, and I am not alone.
This bank had a very precise niche of business and mostly associated with start up culture. Most of the personal deposits were also from executives of startups. So it is basically an isolated event.
But affects everyone as startup funding has to come from some where. Everyone is working for money.
Exactly I don't know what the big deal is with this bank. Why is it important. Not mentioned in the intro so I will give it a miss. Its not in India.
Silicon Valley Bank was involved in Short Selling in Adani Futures through NIFTY
😮
Really? Retribution is Swift. ADANI is going strong while SVB crashed.👍
@@OakSantosh Target was Indian Economy ... via NIFTY ... Adani ... to stop DEDOLLARIZATION
Very good clarification provided by Sri Narasimhan on his debut in this channel!
Upon failure of SVB several rumours started flying around which made one to wonder what exactly resulted in the collapse of this otherwise respectable financial institution.
It's understood that mis match of assets and liabilities was the major factor.
One only wishes this does not result in a contagion effect around rest of the world which already is battling many domestic issues due to war in Ukraine.
🙏🙏 to both SHRI AND SRI SIR'S....
❤ Good Conversation & Mr.Narasimhan lived up to a Financial analyst without Glamour & Pompous...😅😅😅
Fantastic 😊 topic by My Iyer . Need more & I plan to share it as much as possible .
CEO of bank also sold his millions of share a week before of collapse
Thanks to both sri’s for the amazing detail.👍
Finally! Good to see that Sri is bringing in experts rather than asking abhijit. Abhijit has no expertise in finance or economics & makes a lot of crappy statements regarding them
Abhijit should be limited to defense topics. PGURUS should stop talking on nutrition or hotels in Chennai.....etc..
Many thanks Iyerji, 👏🏻👏🏻superb analysis by Narasimhanji, like to hear more from him Iyeravakal🙏🏻
Woah!! What an insight.. great work shree iyer ji..
Excellent articulate commentary from both Mr Sri’s
Awesome to say the least. Thank youuuu Shri & Shri 🙏🏾
Can u believe it I heard that the CEO of the bank was also the head of State regulator of banks. Means police he chor hai
Yes that's right.....i heard it too.
He is a director at the San Fran Federal Reserve. Basically Fox guarding hen house situation.
*SVB's Paradox: Mar 6 SVB gets Forbes' Best Banks Ranking and Internal Collapse 2-3 days later.*
While SVB may be one of the VC Banks in SF, at least 50% of US venture-backed tech and life sciences firms had banking relationships with SVB, according to the bank's website. SVB had a large exposure in China too. Several Indian startups, too, have deposits in SVB and investments from the bank.
Thank you so much for doing this! I have lots investments tied up in the region.
Wallstreet journal has declared svb as best bank before a week.
NYT declared MS as the best Education Minister a few weeks ago
Also Forbes. They listed SVB as one of the five best banks.
Crammer at CNBC touted SVB is as BUY only last week.🤣
Nice Analysis Sri.
Sri Narasimhan had made it so simple that the Run on the liquidity of cash is because of the Interest rate inversion. He also confirms that USDC and Tether are fully backed up by assets. Why Regulators had swiftly acted to take control of SVB?
Good discussion.
Hindenburg must be ashamed of degrading Adani, ignoring this less transparent and dishonest institurion.
Was very balanced views without any bias
Nice, nice, thank you, new area for a few... 🌷🌷
Very Well explained. Highly informative video.
Glad it was helpful!
This is a great explanation seen on RUclips so far on SVB. Just want to put a few things that are my understanding of this. I guess the republicans took a better grip in mid term US elections this irked Biden administration to target the Indian origin NRI's. I heard that the H1B visa wait time is made further long and increased its price to 800$. They are targeting voters mainly on Indian origin. I know Mr Iyer sir can give us much elaborate discussion happening in US politics!
Thank you,
Vijay Rao
I understand that this is also a consequence of rising bank rates and tight money policy. Should the Central Banks takes a lesson out of it.
Great conversation. One wonders where to put money
The thing is we all knew interest rates will rise since inflation shot up over 8%
As a bank, why didn't they prepare for this situation. I would expect they would know how bonds work.
As per the rating given by Forbes in this week(4days back) Forbes also lined with hindenberg for circulating fake toolkits ..it is a slap for soros toolkit gang …before coming to conclusion in to belief by any agency ratings look in to the confidence of business of firms
Higher the returns, higher the risks. Even Citi could not miss the whirlwinds of sub prime crisis in 2008. The so called credit rating companies do only post mortem work. The buck stops with the management. Does US miss the ideal advises of prudence like Sundaram Finance or Cholamandalam Investment of South India.
In SVB case, it was miniscule return with higher risk. Bank is holding huge chunk in lower yield treasury notes. Selling those notes in current market means, taking huge bath on liquidation of those printed money. Hanging on to those notes till maturity means not enough money for depositors who are making a run.
Media there throws stones at others but sleeps on their own. Sad. But what goes around comes around. Interesting talk.
In this case SVB is offering only 0.48 % in checking accounts, however the short term (less then 1 year) risk free asset class offering 3.5 - 4 pc and people are very smart to pull their money and invest in risk free short term assets . The problem is banks are offering negligible rates
Superb discussion
For the non finance people,l to understand, please include a quick primer on why bond value falls when interest rate goes up.that will help people understand the problem in its entirety.
When Interest rates go up, bond holders will sell their existing bonds and enter into new bonds to get higher interest rates (coupon). Hence the price of the existing bonds which were offering lower interest (coupon) go down. This interest rate risk is very high on long term bonds. Hope this clarifies your doubt
Why did the SVB no cash out when the interest moved up. Is there some kind of foul play?
Namaskaram guys 🙏🏻🌹 it’s a great news.
Very good inputs
One clarification - when bond prices fall, is there an impact if they don’t sell at a loss - simply hold it to maturity? SVB was forced to sell because of the dual impact of inflation - if you hold it to maturity, you will get (effectively) 50 percent at maturity.
Why Hindenburg did not prepare any report on this bank ? While they were prepare reports on Adani and destroy Indian banks and indian economy
Their job description is blaming India for anything and everything.
Whr is Mr. Raghuram Rajan who always keep commenting about India?
More to come for USA.
It is hightime USA administrators concentrate on their essential systems than on funding wars.
Great channel.
Excellent
Is it return gift by 🇮🇳 in response to adani fall?
What else ?
Sir,we have CRR & SLR..what's in USA..
Jai hind 🇮🇳🙏
Anyone ( individuals or organizations) living beyond his/her/its means will face similar situations. Western economists brought in the concept of the credit economy making every citizen a debtor, proving costly for people every time such unfortunate developments occur. Those who invested believing in the western corporate governance model will, unfortunately, have to face the brunt of such massive failures. Where are those Hindenberg type research organizations? They could not foresee the massive failures of financial institutions nearer home; instead, they were interested to cook up stories of organizations situated far away for some gains.
This looks like an ALM mess-up due to failure of thr ALCO and Risk Management team...residual maturities of assets and liabilities in various time-buckets....!- Bala
Thanku Sri
Good news
good discussion
Mr. Iyer, I support the cause you vouch for. But I have a humble suggestion. It’s one thing to have podcasts that could be 30-45 minutes, but when you have programs otherwise, you need to be brief. Else you won’t hold viewer interest.
The whole ranking/ rating model is flawed and biased. Just few days back Forbes magazine rated SVB as it's top 5 pick.
This nosedive of west's crediblity is truly spectacular.
Hidenburg can't see an Iceburg nearby
What is your advise to those who Bank with SVB
Nice analysis.
The root cause is different this time. *Here is the de$ perspective:*
-world stop buying USTs since Jan 2022
-this leads to inflation turning inwards within the US
-Powell is forced to raise rates to tame inflation
-high interest rates is what led to the collapse
The 2008 Lehman moment was solved by the government (1)arranging bank mergers (2) $700 bn bailout package.
(1) will happen this time around
(2) will lead to even more inflation, so this doesn't look like a reasonable option this time around
after Rajagopalan , Ankit Shah now Sri Narsimhan is my 3rd favourite Pguru
Valuation Of The Start Up Assets ??
Thank you to both of you! 🙏🏾
In India even. A village cooperative bank fails PM MODI has to answer. In USA Fed comes at the last stage like police in old Tamil movies.
Very good
Why doesn't BBC make a documentary on this.
Why isn't Raghuram Rajan not commenting about Christian growth rate.
BBC partially always about BHARATM now they in big trouble
Karma is fact and the truth
Epicenter of World's vicious financial shocks!
I would love to see sattapuu Raman in Pgurus, it would be a big hit with viewers😀
Some Pawana muktaasan fellows in Bharat also suggested/insisted PM Modi to print and freely distribute money to the poor people during the pandemic...Remember?
Where is Hindenburg 🐕 ,Raghuharam Rajan , Mrityu Sen ??Did they focused on this Bank ??
This kind of duration risk is clearly a miss. A simple ALM system would have pointed it out.
Sree Iyerji, You talk about Bitcoin as not asset based but what about other ones like Ethereum? I hope you can give your thoughts in the next one with clarity.
Few questions-
-How can long term bonds be invested out of short term / on call customer deposits that too in an increasing interest climate
- even at personal level bond placements i never look beyond 3/5 yrs and go for secondary market buying with a 3/5 yr maturity under this rising interest scenario
- the rating is a positional rating and sustainability of profitability / liquidity is a question mark. How can rating agency not red flag the long term bond placement from short term funds?
- india start ups may look for alternate fund option route as the modi govt is fleetfooted in their ddcision making, they may rope in stop gap funding quickly.
Rgs. Dr durgadoss
Indian startups makes the distinction between debt and equity-based investments to explain SVB's collapse's impact on Indian firms. Companies that got equity-based investments would have already received the investment amount, leaving little to no risk. But the risk is significant for firms with a debt-based investment from SVB.
For investments in the form of debt, the money would have been parked in SVB, leaving it stuck after the bank's collapse. Multiple Indian startups have their money stuck in SVB, the most serious being the ones operating in the US. If they have been working mostly in India, they would have funds parked in Indian banks too. The problem is magnified for startups that have SVB as the only main banking partner.
More DEPOSITS LIKE FD and SB accounts liquidity crisis will be solved
Will bring down the salaries in silicon valley and USA in general?
Where is Hidenburg etc
Forbes magazine for the fifth straight year listed SVB in America's Best Banks category.
जय श्री राम 💐💐🙏🙏