One Year Later, 81% of SVB's Clients Still Bank With Them - and Big Banks Got Bigger (axios.com) 22
One year after Silicon Valley Bank's collapse and seizure, "Regional bank stocks remain volatile compared to other types of financial institutions," reports the Observer, "indicating investors' lingering worries about the sector."
But not everyone suffered: Benefiting from the crisis were big players, like JPMorgan Chase. After acquiring First Republic's $212.6 billion in loans and $92.4 billion in deposits for just over $10 billion in May 2023, JPMorgan saw a 67 percent year-over-year growth in profits that quarter. Overall, larger commercial banks saw inflows as customers sought safer institutions to hold their money.
And what happened to Silicon Valley Bank? Axios reports: Today, SVB says it's still the same bank customers loved, but with better risk management and some other tweaks, like smaller deposit requirements for startup borrowers, president Marc Cadieux told Axios last month. 81% of SVB's clients from a year ago are still banking with SVB, according to Cadieux, with "thousands of them" returning after initially switching out...
"I think there was an inference that this was a regional bank crisis, but it really wasn't — those were niche banks," Citizens CEO Bruce Van Saun tells Axios. "The failure was is in governance and the business model."
Citizens is America's 14th largest bank, and as its CEO, Van Saun was asked by CNN what caused 2023's failures at other banks: CEO Van Saun: Both of those banks [Signature Bank and Silicon Valley Bank] went from $50 billion in assets to over $200 billion in four years. They grew too fast, took in a high percentage of uninsured deposits, had very concentrated, narrow customer bases so they were susceptible to [deposit] flight risk. They also borrowed short and invested long, which is a cardinal sin of banking. They didn't manage their interest rate risk well because they didn't have the muscle that you would have if you grew slowly over the years and were heavily regulated like bigger banks like ourselves.
CNN: Who deserves more blame: failed banks' management teams for not ensuring proper guardrails were in place or financial supervisors whose jobs are to identify red flags?
Van Saun: It's a joint failure...
CNN: [W]hat about commercial real estate? The number of people working in offices is much, much lower than it was pre-pandemic. Are you bracing for another chapter of banking stress? What is Citizens doing to cushion against potential high losses in the sector given close to one-fifth of your loans are there?
Van Saun: You have to look under the covers. The nature of our portfolio matters.
Within commercial real estate, industrial, warehouse and distribution space is fine. Multi-family homes are generally fine. When it comes to offices, we have certain pockets of life science businesses like lab research facilities that are super safe because they never had to close during Covid. [Loans to general office buildings are riskier though, he said.] We go through all of that and we say we'll lose some money here, but we're not going to lose our shirt and we've put up big reserves against them. We're working on a loan-by-loan basis with our most senior people. I think it's a well-managed process.
But not everyone suffered: Benefiting from the crisis were big players, like JPMorgan Chase. After acquiring First Republic's $212.6 billion in loans and $92.4 billion in deposits for just over $10 billion in May 2023, JPMorgan saw a 67 percent year-over-year growth in profits that quarter. Overall, larger commercial banks saw inflows as customers sought safer institutions to hold their money.
And what happened to Silicon Valley Bank? Axios reports: Today, SVB says it's still the same bank customers loved, but with better risk management and some other tweaks, like smaller deposit requirements for startup borrowers, president Marc Cadieux told Axios last month. 81% of SVB's clients from a year ago are still banking with SVB, according to Cadieux, with "thousands of them" returning after initially switching out...
"I think there was an inference that this was a regional bank crisis, but it really wasn't — those were niche banks," Citizens CEO Bruce Van Saun tells Axios. "The failure was is in governance and the business model."
Citizens is America's 14th largest bank, and as its CEO, Van Saun was asked by CNN what caused 2023's failures at other banks: CEO Van Saun: Both of those banks [Signature Bank and Silicon Valley Bank] went from $50 billion in assets to over $200 billion in four years. They grew too fast, took in a high percentage of uninsured deposits, had very concentrated, narrow customer bases so they were susceptible to [deposit] flight risk. They also borrowed short and invested long, which is a cardinal sin of banking. They didn't manage their interest rate risk well because they didn't have the muscle that you would have if you grew slowly over the years and were heavily regulated like bigger banks like ourselves.
CNN: Who deserves more blame: failed banks' management teams for not ensuring proper guardrails were in place or financial supervisors whose jobs are to identify red flags?
Van Saun: It's a joint failure...
CNN: [W]hat about commercial real estate? The number of people working in offices is much, much lower than it was pre-pandemic. Are you bracing for another chapter of banking stress? What is Citizens doing to cushion against potential high losses in the sector given close to one-fifth of your loans are there?
Van Saun: You have to look under the covers. The nature of our portfolio matters.
Within commercial real estate, industrial, warehouse and distribution space is fine. Multi-family homes are generally fine. When it comes to offices, we have certain pockets of life science businesses like lab research facilities that are super safe because they never had to close during Covid. [Loans to general office buildings are riskier though, he said.] We go through all of that and we say we'll lose some money here, but we're not going to lose our shirt and we've put up big reserves against them. We're working on a loan-by-loan basis with our most senior people. I think it's a well-managed process.
News at 11 (Score:2)
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Surviving a financial storm like a Silicon Valley startup: Pivot, iterate, and secure 81% user retention. Meanwhile, big banks on a shopping spree with others' losses.
They got purchased by big banking. First Citizen Bank and HSBC got SVB for dimes on the dollar. (in the case of HSBC for cents on the million dollars). The big banks like the ones that now own SVB continued to run one of the best years ever while SVB is now just another severed head in the trophy room. A logo on some of their buildings.
SVB ran their company indeed like a Silicon Valley Startup: no idea what they were doing, predatory business tactics, and then criminal levels of negligence. SVB owners are
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Taxpayers (those of us who pay taxes) bailed them out.
The bank management made out like bandits... they sold most of their stock just before the crash.
Could we do a survey? (Score:3)
How many of their clients even knew that their bank had any troubles?
Please don't forget that most people get their "news" from infotainment outlets that are quite stingy with the info and rely mostly on the tainment. As JibJab once put it [youtube.com], "only three percent of people can point to Kabul on a map, but 96 percent can claim they've seen Brit's putty tat".
I would not be surprised at all if they just don't even know it.
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How many of their clients even knew that their bank had any troubles?
If, as a business, you don't know your bank is in trouble, you might as well be out of business.
To answer your question, they knew [observer.com] and were trying [cnbc.com] to get [cnbc.com] their money [techcrunch.com] out [cnbc.com].
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How many of their clients even knew that their bank had any troubles?
Please don't forget that most people get their "news" from infotainment outlets that are quite stingy with the info and rely mostly on the tainment.
For most people - If it's not on FB, IG, CNN, or MSNBC ... then it did not happen. - could have been your entire post.
Banks will not be allowed to fail, money printed (Score:1)
If you think you've seen inflation already, get ready for the storm because more and more banks are going to be up for failure and eventual bailout.
The government will not allow banks to fail, except for maybe a scapegoat bank here and there.
What that means is that money you hold today will be worth MUCH less in ten years time. It will not buy the same house, the same clothes, the same food.
You have to let organizations that make stupid choices fail. And the people that choose to keep money with stupid pe
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And, when I listen to them, all I hear is “w
Lehman Brothers was for masses not banks. (Score:1)
And, when I listen to them, all I hear is âoewwwaahhhh waahhh why canâ(TM)t I take infinite risks
What world are you living in?
Because in this one, the bakers ARE taking invite risks, but they get rewarded for it when it fails.
See: SVB.
Lehman Brothers was to make the sheep think the government would do something about out of control banks, while letting the banks actually get even more out of control.
Banks have zero controls or fear now (especially large banks). They can do whatever they like, and
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Plus, check this out:
https://research.stlouisfed.or... [stlouisfed.org]
Countercyclical capital buffers are 50% higher now. That’s $$$ that the banks hold in liquid reserves in case the riskier bits of their portfolio spontaneously combust. Bankers absolutely hate keeping that buffer, because that
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At the same time - risk needs to be shouldered by those taking the rewards.
The FDIC and SPIC need to be restructured, and the default action should not be receivership like it is now but a mandatory investment that dilutes all current equity holders basically out of existence.
Similarly the institutions lenders needs to also feel the credit risk. The public ownership corporation should be allowed to shift all the interest rate risk to them (if when rates go down the loan terms can be modified to match, if th
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Banks are bit players. Main inflation driver is fiscal and monetary policy.
Inflation is just a tax on the middle class which is used because the direct taxes needed to keep the economy running are politically impossible. Unfortunately not a stable solution.
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If you think you've seen inflation already, get ready for the storm because more and more banks are going to be up for failure and eventual bailout.
Why would that suddenly happen though? We had nearly 10 years of QE and zero interest rates after the GFC and there was no inflation. The inflation only turned up when fiscal stimulus distributed money broadly among workers. That that caused inflation makes a whole lot of sense - it was pure helicopter money.
IMHO, the reason we didn't see inflation before is that if you print loads of money and it just doubles the bank accounts of Musk, Bezos and Gates, other than buying up assets (i.e. boosting share marke
And why not? (Score:2)
SVB has just demonstrated that that they have the political connections to receive a full bailout instead of the FDIC $250K max plus an auction of the bank's furniture. They are now in possession of a "too Big To Fail" get out of jail free card.
I laughed when they died (Score:2)
They wouldn't give me a home loan because I was retired. I could buy the house outright many times over in cash but "oh sorry your income doesn't come from 9-5 work so no go".
Fuckers. Learn to code.
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Yes, as if I didn't talk to multiple banks and third party mortgage agents. Duh. This was a 7 figure purchase. You think I asked the teller at my local Wells Fargo for a home loan, got told no, and just walked away? Jfc.
In my situation the only way you can get a "loan" is if you "self fund" it which is essentially putting all the money plus interest in an account with them and then they pay themselves from that account against the fake loan they gave you that you didn't need because the money is already
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I'm not surprised. I know the world is stupidly run in many areas.
Here's what they want: person with big corp salaried job paying 1/3rd of the take home on a mortgage for 30 years, who will be unable to pay during the next down business cycle and lose the house. Banks do not want to foreclose and resell. It's not a financial win for them and not where they make their home loan money. Credit rating 650+ and not too many late payments, prefer no bankruptcies.
Vs someone who has the resources to pay no matt
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Oh and I do have income, it just isn't standard salary. My investments of all sorts bring in enough to make me a 1%er, but none of that counted no matter who I asked.
So, yes, I laughed when I read they'd failed. They were the least helpful (rudest) of all the banks I talked to.
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Most banks won't give you a home loan if you don't have steady employment. Doesn't matter how much money you have - even if it's in the same bank.
You do gig work, "creator economy" (aka "youtuber" or such) or other job? You won't get a loan. Even if you have tons of assets and a great credit history.
It's not abou
Learning (Score:1)