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How much fear is in the air about SVB and the greater implications?
"And a question for Yogi, who is on the list of "two dozen" banks who would have negative equity if all their bond portfolios were marked to market?"
@Jim0445, I haven't seen a specific list but that is from Twitter speculations based on full mark-to-market of underwater HTM holdings. See this link for a newest speculation, Twitter LINK.
A big factor in the demise of these failed banks may have been the role played by the social-media and take all this with generous grains of salt. What used to spread over weeks or months can now spread in hours.
A bank will fail if there's a run on the bank in excess of the amount of cash the bank can raise.
Negative equity makes it hard for a bank to raise a lot of cash, since even if it could liquidate its investments without driving prices down, it still wouldn't raise enough cash to cover 100% of deposits.
The failure arises because of the run on the bank that cannot be met. Merely having negative equity doesn't cause the failure. If we assume that depositors act rationally (there's your joke for the day), then insured depositors will not pull out their money. Under that (ridiculous) assumption of rationality, it also matters what percent of deposits are uninsured.
To take an extreme case, if there's just a single dollar in a bank that's uninsured, the bank is going to be able to cover a withdrawal of that dollar, regardless of how deeply negative its net equity is. And the remaining dollars, being insured, won't be pulled in a panic.
The IBD piece is based on an S&P report from a few days ago and lists the 10 banks with the highest percentage of uninsured deposits along with their loans and held-to-maturity (HTM) investments. Those are the investments that are hard to liquidate without taking losses, and marked-to-market tend to be below par.
At the top of the list is BNY Mellon (96% uninsured), though with only 31% of deposits invested in loans and HTM securities. Both SVB and Signature bank are high in both uninsured deposits and HTM+loans (around 90% or higher).
While not at the same stratospheric levels, Citigroup is notable for having 77% of deposits uninsured (First Republic is at 68%), and 64% of deposits in HTM+loans.
Company Symbol Uninsured deposits / Loans and HTM/ YTD % domestic deposits total deposits change (higher is riskier) (higher is riskier) Bank of New York Mellon (BK) 96.5% 31.2% -0.1% SVB Financial Group (SIVB) 93.9% 94.4% -53.9% State Street (STT) 91.2% 40.1% -1.8% Signature (SBNY) 89.7% 93.3% -39.2% Northern Trust (NTRS) 83.1% 54.5% -3.1% Citigroup (C) 77.0% 64.6% 4.3% HSBC Holdings (HSBA) 72.5% 47.4% 11.9% First Republic Bank (FRC) 67.7% 110.6% -69.1% East West Bancorp (EWBC) 65.9% 91.1% -13.9% Comerica (CMA) 62.5% 72.8% -36.6%
The Business Insider piece looks at "15 major banks" as of the end of 2022. Here too, Citigroup stands out. It must be nice to be TBTF.
Financial institution Deposits not insured by the FDIC Signature Bank 90% SVB 88% Citigroup 85% First Republic 68% JPMorgan 59% BNY Mellon 56% Citizens Financial 49% KeyCorp 47% PNC 46% Truist 46% M&T Bank 45% Fifth Third 42% Bank of America 33% Goldman Sachs 33% Huntington Bancshares 33%
@rforno Yup. We recall the all-nighter programs during 2008 for CNBC and Bloomberg.....no info-mercials, eh?
Back then you knew it was bad when CNBC would say on Friday afternoon "tune in for special coverage at X'oclock on Sunday" LOL
Bloomberg thankfully never was, and isnt, sensational. Night and day coverage/analysis where you can actually learn something even if it's just on in the background. CNBC was/is like social media, constantly beeping/buzzing/blinking with something to give viewers another dopamine hit.
(don't get me started, my thoughts on this would hijack this thread....)
"constantly beeping/buzzing/blinking with something to give viewers another dopamine hit"
That’s a reference to Cramer? Right?
Not necessarily, but he certainly counts. BOOYAH! /ducks
I refer to them doing constant beeps/blinks/alerts for graphics shifts and/or 'breaking' news on company earnings and other stuff that's important but not 'critical' to know like they did like every 20 minutes back when I was a regular viewer during the GFC. Maybe they've gotten better, I dunno.
Naw. Occasionally on the treadmill at the gym I watch CNBC, but without any volume, as I’d need to plug in headphones. And only because they don’t have Bloomberg. But it’s actually depressing looking at the same bunch that’s been on for decades now. If they were any good at what they do you’d think they’d have retired long ago. Was it Mark Haines that was pretty good? Went steadily down hill after he unfortunately passed away.
@rforno Yup. We recall the all-nighter programs during 2008 for CNBC and Bloomberg.....no info-mercials, eh?
At one time CNBC aired a variant called “CNBC-West” in the evening. It was excellent and quite humorous at times. I’d gladly pay up to view it, but haven’t been able to track it down. You are correct that Bloomberg has too many infomercials evenings. That’s one sleazy fella pushing off those coins on unsuspecting buyers. No way you can tell the quality / monetary value of an investment grade Morgan from a TV camera shot.
Bloomberg daytime seems to go for the ratings with a lot of glib conversation. Every 10 points up or down in the Dow merits some explanation. Most are good at TV but not particularly well versed in finance. And one would guess a lot of what they say is read from teleprompter and written off-screen by their team of writers. I do find the evening shows more substantive and less showbiz-like. Maybe they feel only die-hard market watchers will tune in during prime evening viewing hours anyway. And, there’s no U.S. markets to grab attention, although the futures, Asian markets and FX are always of interest to me.
I think the type of commercials depends if you catch it on cable, streaming, or their app, ot how your network is setup. I know there are different feeds that seem to have different commercials, plus your cable operator may run their own ads/infomercials as well.
Sure there's a lot of room for filler during the US day but I don't get the sense they are as tick-for-tick coverage with the markets like CNBC and the scripts/tone are NOWHERE as sensational. The Asian shows are pretty good, I agree.
Overall, in my view, BBG is still leaps and bounds ahead of CNBC.
Bloomberg is mostly cerebral folks. Generally, they are not looking at a prompter when speaking and/or a conversation, unless they need current data. Take a peep at the bio of some these folks; as most have backgrounds listed. I'd like to have a week of chat with Tom Keene and his photo memory. He'll be missed when he decides to retire. Good evening.
I tune in late afternoons, late evenings here. Commercials at a minimum: Roku TV. I typically bump into Mid-East, then Europe, then the "Surveilance Early" and then "surveilance." if I'm up that late, about 2:00 a.m. I miss Emily Chang. Not doing "Technology" anymore.
Comments
https://www.nytimes.com/2023/03/18/opinion/svb-banks-change.html
@Jim0445, I haven't seen a specific list but that is from Twitter speculations based on full mark-to-market of underwater HTM holdings. See this link for a newest speculation, Twitter LINK.
A big factor in the demise of these failed banks may have been the role played by the social-media and take all this with generous grains of salt. What used to spread over weeks or months can now spread in hours.
Negative equity makes it hard for a bank to raise a lot of cash, since even if it could liquidate its investments without driving prices down, it still wouldn't raise enough cash to cover 100% of deposits.
The failure arises because of the run on the bank that cannot be met. Merely having negative equity doesn't cause the failure. If we assume that depositors act rationally (there's your joke for the day), then insured depositors will not pull out their money. Under that (ridiculous) assumption of rationality, it also matters what percent of deposits are uninsured.
To take an extreme case, if there's just a single dollar in a bank that's uninsured, the bank is going to be able to cover a withdrawal of that dollar, regardless of how deeply negative its net equity is. And the remaining dollars, being insured, won't be pulled in a panic.
Here are two sources with fairly hard figures on percentage of uninsured deposits.
https://www.investors.com/etfs-and-funds/sectors/banks-report-most-exposed-to-uninsured-deposits/
https://www.businessinsider.com/signature-svb-us-banks-have-over-1-trillion-uninsured-deposits-2023-3
The IBD piece is based on an S&P report from a few days ago and lists the 10 banks with the highest percentage of uninsured deposits along with their loans and held-to-maturity (HTM) investments. Those are the investments that are hard to liquidate without taking losses, and marked-to-market tend to be below par.
At the top of the list is BNY Mellon (96% uninsured), though with only 31% of deposits invested in loans and HTM securities. Both SVB and Signature bank are high in both uninsured deposits and HTM+loans (around 90% or higher).
While not at the same stratospheric levels, Citigroup is notable for having 77% of deposits uninsured (First Republic is at 68%), and 64% of deposits in HTM+loans. The Business Insider piece looks at "15 major banks" as of the end of 2022. Here too, Citigroup stands out. It must be nice to be TBTF.
'The bank was using an incorrect model as it assessed its own risks amid rising interest rates, and spent much of 2022 under a supervisory review.'
https://www.nytimes.com/2023/03/19/business/economy/fed-silicon-valley-bank.html
Chyron on BBG right now: "POWELL. YELLEN SAY CAPITAL AND LIQUIDITY OF US BANKS ARE STRONG"
Shades of Sunday evenings circa 2008....
Friday’s caption - ”Yellen Fire in a Crowded Bank”
Yup. We recall the all-nighter programs during 2008 for CNBC and Bloomberg.....no info-mercials, eh?
Bloomberg thankfully never was, and isnt, sensational. Night and day coverage/analysis where you can actually learn something even if it's just on in the background. CNBC was/is like social media, constantly beeping/buzzing/blinking with something to give viewers another dopamine hit.
(don't get me started, my thoughts on this would hijack this thread....)
Right on... tell it like it is.... not just CNBC either.
That’s a reference to Cramer? Right?
I refer to them doing constant beeps/blinks/alerts for graphics shifts and/or 'breaking' news on company earnings and other stuff that's important but not 'critical' to know like they did like every 20 minutes back when I was a regular viewer during the GFC. Maybe they've gotten better, I dunno.
Bloomberg daytime seems to go for the ratings with a lot of glib conversation. Every 10 points up or down in the Dow merits some explanation.
Sure there's a lot of room for filler during the US day but I don't get the sense they are as tick-for-tick coverage with the markets like CNBC and the scripts/tone are NOWHERE as sensational. The Asian shows are pretty good, I agree.
Overall, in my view, BBG is still leaps and bounds ahead of CNBC.
Good evening.
https://messaging-custom-newsletters.nytimes.com/template/oakv2?campaign_id=116&emc=edit_pk_20230321&instance_id=88295&nl=paul-krugman&productCode=PK&regi_id=22268089&segment_id=128386&te=1&uri=nyt://newsletter/b78235e8-973a-55f0-8a6d-70dfa2059e34&user_id=83d45440ead1d14c2a89a1e7221337d1