Member Info for sageoflondon

If SVB UK hadn't been saved this would likely have been closer to £1, not £3!

Sure banks are suffering. Ultimately however this episode showed just how poor basic risk management is in technology sector - who puts all their money in a regional bank that is dependant on....other technology companies. That's a bit like working for say a bank who you are dependent on for salary, bonus, healthcare etc. and putting your life savings into shares / deposits with the same bank. Regardless of how this turns out, risk management practices found wanting. Also cash will be a lot tighter than many think - when was the last funding round etc, when will the next one be. NAV isn't relevant at the moment.

This potentially creates a generational opportunity for any PE / VC with significant dry powder (cash!!) to invest at the moment.

If a Goldmans, JP Morgan etc. came in they would not be doing it for anything other than a very large profit given the level of risk. I can't see the UK government doing it for free either. I wasn't referring to SVB shareholders - they are wiped out - I am specifically referencing any companies who subsequently benefit from any bailout.

But why would you want to buy this at zero? The point is it isn't currently worth zero? It's likely to have liabilities and not assets. We don't know what has been sold down yet to try and meet withdrawal requests and the likely losses suffered in the process. The consequences can be addressed without saving the bank, but shareholders in those companies shouldn't expect a free get out of jail card - the government needs value for money. You want to survive take this offer etc. If the government holds the debt lever that may have a significant impact on equity in any portfolio company.

This will never be a cost free rescue.

It says 'step in to address the consequences' - nothing about bailing the bank out itself. There are a number of different ways of addressing consequences. Like debt for equity etc. Shareholders can't say a lot if the company is insolvent without. Any bailout will depend on the quality of assets on the balance sheet.

I cannot imagine the government doing a large bail-out for nothing. I could be wrong. Why not just take direct stakes in those businesses - i.e. cash injections - at least you then own some equity - if they are going into liquidation anyway - that's what generally happens.

You have a bank (SVB UK) with an awful lot of customers who just want their money back ultimately. Reputationally it's probably spent now. It's also not just down to a bad run of luck - it's essentially mismanagement. We have no idea what the assets actually look like at all, or whether they are likely to take substantial losses on these. A lot will depend on that. I can't see this ending well personally.

unless there is a rock solid RNS here on Monday I would envisage this travelling much further south. If there is a negative RNS then I have no idea where the floor is.

Basic risk management is a good spread of banks to manage your overall exposure to any one bank. Even on personal accounts, let alone from a corporate perspective. There shouldn't be any company with everything in SVB. That's back to basics, but entirely possible. If you are going to have everything with one bank, make sure it's a systemically important bank that the government can't afford to let collapse!!

I think anyone who needs their money from SVB UK and hasn't already got it, won't receive for a long time as I said. Any company relying on further drawings or balances held there to fund immediate needs is going to have to find alternative funding. That might not be easy. This isn't a systemically important bank. A few (10 or so) technology companies going under isn't systemically important, or a few investors in high risk start up tech losing their shirts - again not systemically important.

That sounds to me like anyone who hasn't already got their money, won't be getting it for a long while, if at all.

Show me a bankrupt / failed bank where it's small overseas subsidiary has continued to run with no difficulties = I think you will struggle. The UK bank has no retail depositors so no real appetite for a full government rescue as with Icesave and the like. Most start-ups and VCs will have emptied their accounts as soon as possible. There are reports of withdrawals not appearing from what I have read. This isn't going to be a question of whether there is an impact, just on how bad that impact is. It's pretty tough to replace an RCF at short notice like that on anything resembling decent like for like terms - those likely wouldn't be available. As for cash on deposit for Grow and it's portfolio companies - I have no idea. Either way the ripples from this are going to be felt for a long time across the technology section both here and in the US. The UK and Europe is part of the same ecosystem ultimately unless we are talking localised UK / Europe specific, even then a lot of the funding often comes from across the pond. I think it will be difficult to produce anything resembling a reassuring RNS by Monday - there might be something, but likely a lot of unknowns and will be for months - ie what assets there are to pay depositors etc once they have been sold etc. May well turn out ok in the end - but that end it a good few months if not years away. Fire sales of bank assets also go for fire sale prices.

It's not just the specific impact though - that's obviously a big part of it. It's also about what it says about the state of technology start-up finances. This will have an impact. There will be a lot of companies out there that were reliant on the finance and are very unlikely to be able to obtain the same terms in the current market given the changing rate environment etc. This has the potential to have a significant impact on that market.

It looks like SVB has now been shut. California banking regulators on Friday closed SVB Financial Group putting the tech-heavy lender into receivership and will dispose of its assets, moving quickly to protect depositors. I guess we will now find out exactly how that translates for Grow.

The regulator appointed the Federal Deposit Insurance Corporation (FDIC)as receiver, according to a statement.

Stands to reason that SVB likely won't be here - certainly not in it's current guise. Are you suggesting you actually had a conversation with the CFO of MV ? Can you also explain how the fact MV is raising cash in EIS and VCT impacts liquidity of PLC?

Probably plenty of potential buyers if the loan book etc. stacks up, but that takes a little time to work through. Also about the price as well....

To be clear though, EIS and VCT money cannot just be used for the Plc - they are different entities - sure it represents investment funds to be invested, but distinct from this quoted entity?

and they will be the ones who are ahead in the stampede to get out! SVB are hardly likely to say get out as quickly as you can!