Member Info for TheTrotsky

When are people going to stop talking nonsense. SVB wasn't in the business of lending to tech start-ups! The start-ups may have overdraft facilites but they would likely be relatively small; likewise any loans. Tech start-ups don't generally have any assets to collateralise for loans.

On the other hand, tech start-ups are, more often than not, awash with cash from fundraisings. However, due to the current economic climate, fundraisings have dwindled and tech start-ups have been withdrawing, rather than depositing, cash. As a result, SVB was forced to sell its assets for sale (near cash assets that tend to generate a higher return than cash but which can be sold quickly if cash is required). I would very much doubt that HSBC is buying a large loan book as some would seem to think.

That said. It's quite possible that a lot of these start-ups could go out of business if they cannot access new sources of cash and I rather suspect that HSBC, like most UK high street banks, may prove to be a poor fit. It seems that a lot of tech start-ups favoured SVB because it ran (or supported) networking events and helped (probably for a fee; either in cash or shares) to faciliate new fund raising rounds from tech investors. It remains to be seen whether HSBC can offer the same service but one thing's for sure, the tech start-ups will not be impresssed with HSBC's technology (positively prehistoric) or its banking charges.

I rather suspect that HSBC only paid a £1 because more than a few of the tech start-ups will now, more than likely, move on or simply dwindle and die as their cash dries up. In any event, the investment may well turn out to have a negligble impact on HSBC's long-term UK profits one way or the other.

It's a balancing act. DLG has a large fixed cost base (like all insurers). Pricing its insurance policies totally out of kilter with the rest of the market would have a severe impact on its topline and could actually be counterproductive. For example, if it sells no insurance policies (because its policies are too expensive compared to its peers) then it makes 100% loss. Whereas, if it trys to sell just enough insurance policies to cover its costs (more expensive than its peers but not necessarily totally out of kilter) then it risks losing certain economies of scale which will only serve to push up its variable costs and push it back into loss.

Clearly motor insurance isn't out of the woods yet and it's more a case of trying to mitigate its losses rather than eradicate them. It would appear that DLG is not alone in seeing price inflation in motor and there is a general trend across the market to increase prices and I'm sure that DLG will follow suit whilst trying to remain competitive with its peers. At the end of the day, the price rises DLG can force through are mitigated by the market. At some point, costs should either plateau or fall, at which point DLG and its peers will make "hay" for a period (I'm sure that DLG will not be alone amongst insurers in wanting to bolster its reserves when the opportunity arises), until competition eventually starts to force down policy prices once again.

The insurance industry has always been cyclical but I suspect the last couple of years have been unprecedented (the Covid effect on the second-hand car market hasn't been seen in living memory). The impact on DLG has certainly been worse that many of its peers and I think that was, in part, due to a decision by DLG to try and grab market share as we exited Covid (I can recollect the pricing of its policies, for once, being a lot more competive than its peers) which we can now say, with the benefit of hindsight, was a major snafu. In fairness, I'm not sure any of the insurers fully appreciated that the chip shortage would last so long or that it would reduce the number of new cars being produced so severely and/or the impact that would have on the second-hand market. It just happened that DLG made the wrong strategic decision at the wrong time; I think if the boot had been on the other foot and the likes of (say) Admiral had been trying to regain market share on DLG, rather than the other way round, then (say) Admiral might well have made the same strategic error.

As regards weather related losses, those do happen from time to time but this year's appear to be mostly confined to DLG and would appear to be predominantly down to DLG not properly re-insuring. Another strategic decision but one that could, and should, have been foreseen; it was akin to someone choosing not to insure their house in the hope of saving money - a great idea if your house doesn't burn down but distinctly stupid if it does. It was bad management.

Lloyds may well have "mugged themselves" but you could make a strong argument that, in part, Lloyds helped to save the UK economy back in 2008. We were looking into an abyss if the contagion continued to spread. Gordon Brown didn't mug Lloyds. If Lloyds hadn't saved Halifax its problems, as well as the rest of the UK economy, may have been just as bad, if not worse. The UK economy may not have been sparkling since 2008 but it has at least been resilient and it has allowed Lloyds to generate the profits to re-build its balance sheet and, if not Lloyds, then who would have been in a financial position to step into the breach? Given their global/investment banking agendas, I'm not sure that either Barclays or HSBC would have been suitable candidates to step into the breach and NatWest had its own problems to deal with (if Halifax had been added to its problems that would probably have been the final straw to break the camel's back and just created an even bigger problem to try and fix). It had to be Lloyds.

I don't care which bank you are, no bank can survive a run on depositors. The whole banking system is based on trust e.g. if there was a run on UK banks, the first funds that would be called upon would be the deposits held at the BoE which in turn would have a knock-on effect on the UK government.

It's easy to sit in our "ivory towers" and **** off the like of SVB for not hedging its US Treasuries (like UK banks do with their UK gilts) but has anybody actually paused to think who these hedge counterparties are and what the impact would be if all of their hedges were called in at once? The UK banks' hedges are likely useless in extremis.

Bottom line, it's all a question of balance and confidence. It's all well and good suggesting that we should let the bad apples collapse but we can't ignore the law of "unintended consequences". There's absolutely no doubt that part of the reason we are in our current financial straights is due to the unintended consequences of the 2008 bank bail out but that doesn't mean that the bail out was necessarily a failure (the fact is that without the bail out we would most likely have been in far worse problems; problems would likely have been different, e.g. mass unemployment, but no less damaging).

The issues that the likes of SVB raises are not simple or straightforward. In 2008 the UK government allowed Northern Rock to collapse because it wasn't considered "too large to fail" and yet the ripple affect from that collapse only served to further undermine the weakened UK banking sector and customer confidence. These decisions cannot be taken in isolation; you have to consider all of the inter-connections and the last thing you want to do is stoke even more panic amongst customers and/or markets. The doom-meisters would have you believe that this type of correction is long over due but this isn't 1928 anymore; the financial sector is a lot more intertwined than it ever was and even ostensible "safety measures", e.g. hedges, pose a financial risk (some of those hedge counterparties are no doubt hedge funds, insurers, re-insurers etc. and if they should collapse when called upon to meet massive margin calls then the original problem may simply rebound back onto the banks). This is not a time to be revelling in the dysfunction.

Badgernator, you can't compare SVB UK to Halifax.

Halifax was a much larger entity than SVB UK and Lloyds had been "stalking" Halifax for a number of years. Sure, Lloyds should have taken the time to do a full due diligence but the 2008 market crash didn't permit them that luxury. Lloyds literally had 24-48 hours to make the call before the doors would have closed on Halifax permanently. Also, Lloyds were under huge political pressure to save Halifax because the UK economic fall out would have been dire if it had gone under. I doubt that Lloyds (or anybody else for that matter) would have expected HBoS to have been so cavalier in its business lending in the years prior to the 2008 financial crash.

Given the circumstances of the bail out of Halifax and the political pressure that was applied, I am somewhat surprised by the amount of opprobrium that is continuously heaped upon the Lloyds BoD. It often seems to me that the UK government is given too much of a free ride; successive governments appear to have forgotten the "favour" that Lloyds did them and have treated Lloyds rather abysmally since. Sure, Lloyds was no angel itself, but the HBoS debacle was not entirely of their own making and the likes of Noel Edmonds et al are fortunate that there is still a bank around that they can actually sue for their losses. It seems to me that UK government is quite happy to leave Lloyds to pick up all of the bad publicity and hasn't cut them any slack (there doesn't ever appear to have been any quid pro quo and I'm sure that many of the verbal promises that were no doubt made at the time to persuade Lloyds to save Halifax have subsequently been fogotten).

This appears to be simply an issue of contagion. Guaranteeing the deposits of SVB's customers will not "fix" this problem and indeed could be counter productive (if governments guarantee the deposits of SVB's customers then you could see funds being withdrawn from other banks to be deposited with SVB which in turn could cause problems for other banks whilst "ring fencing" existing deposits may only result in SVB "withering on the vine" because of a lack of any new deposits). Governments around the world will, I think, instead want to find "safe harbours" i.e. large banks with sufficient liquidity to restore confidence (sufficient to stop any further "runs").

Should Lloyds put it's name into the hat for SVB UK? I'm not sure that SVB is quite the "basket case" some seem to think; this is not, it would appear, an issue of bad loans (I don't think SVB actually has a large loan book) but unhedged short term investments held in reserve to provide liquidity if called upon. It's the classic case of the capital vs liquidity conundrum, and the large UK banks should certainly have more than enough liquidity to fix that but the business is fairly nascent here in the UK and I'm not sure that the UK banks are a good fit with SVB's customers (a lot of them probably left the UK banks in the first instance so as to join SVB's dedicated "network" and access to investors). As long as the UK banks don't have to plug any of SVB's losses, I don't think that SVB's customers pose much risk per se but I'm not sure that Lloyds can offer them the services that would make them want to stay. I would have thought that Barclays and HSBC's investment arms might better suit them (at least they offer them the prospect of access to investors).

Despite what I've read about SVB in the last few days, I'm still not clear why it apparently needed to cash in its for sale assets all at once; because of the wider economic downturn its customers were increasingly needing to withdraw funds rather desposit them but this was a gradual process. The fact that SVB's treasury notes were unhedged, its Head of Risk position had been vacant for 8 months until January and the Fed has signalled still further rises in interest rates may have brought the issue to a head but I would be worried if the sell off was due to an immediate need for cash. In the absence of the latter, it would seem that SVB was quite naive to think that, having once dug itself into a hole, it could simply go to the market to bail it out without any ramifications (having once recognised the magnitude of the problem you'd have thought that they'd have made a bee-line to the US Fed rather than simply selling the assets and hoping for the best; they seem to have been fire fighting from the get-go)

c$19bn is not a small misjudgement! I can't imagine that SVB would have been receiving $billions of VC money on a regular basis, if at all. I could imagine them having a shortfall of (say) $100m but that wouldn't explain them selling their entire for sale asset portfolio. I think there's (a lot) more to this.

It would appear to be related to SVB in the US: https://www.bbc.co.uk/news/business-64911066

The reality is that no bank, or other financial institution for that matter, holds sufficient cash to hand if its customers decide to withdraw all of their funds. However, it all strikes me as somewhat odd. SVB's customers appear to be withdrawing funds following the announcement of the loss and the need to raise fresh capital but if fails to explain why SVB needed to sell all of its portfolio in the first instance. The c$1.8bn crystallised loss is not the story. The fact that SVB, all of a sudden, needed c$19bn of cash is the real story, which nobody appears to be addressing. Either SVB was experiencing a large "run" before the sale of the asset portfolio or it had some other (very serious) operational problem. The assets sold were its "rainy days" funds. No bank or financial institution sells all of its "rainy days" fund in one go unless it has a dire problem.

It's a bit odd. On the BBC website they say SVB has been forced to raise $2.25bn because it lost $1.8bn offloaded a portfolio of assets, mainly US Treasuries, and is now facing the prospect of a "run" as its predominantly start-up customers are being advised to withdraw funds.

What the article fails to address are the reasons for SVB's apparent "fire sale". According to its Proposed Stock Offering, SVB incurred the $1.8bn loss because it sold c$21bn of assets, substantially all of its available for sale securities portfolio, but it fails to explain why SVB "suddenly" needed c$19bn of cash in the first place. The BBC article suggests that SVB's customers were being advised to withdraw their funds after the announcement, not before. Personally, I wouldn't be looking to invest in SVB's share offering before it explained why it needed to sell its portfolio; it suggests to me that SVB had some significant operational problems beforehand (which it doesn't appear to care to divulge) and that it needed the cash tout suite (never a good sign) and couldn't approach the Fed for some (behind the scenes) support.

https://www.bbc.co.uk/news/business-64911066

If you bothered to look the sell off this morning is affecting all financials, not just Lloyds.

Does anybody else use L2 market data? I'm using LSE's offering but it's recently gone up c50% in price and I'm wondering whether it's worthwhile and/or whether I can get a better deal elsewhere. For example, given that MMs are the only ones to generally offer a bid-offer price on CASP and don't report all of their trades in real-time it's sometimes of very limited help and can even be (deliberately) misleading. I'd appreciate people's thoughts on the value of L2 market data (particularly for AIM shares) and/or whether there are any other (better) alternatives to LSE.

It just seems to me these days that the more you pay the less you get (I used to use MoneyAM and was very happy with their service until they were taken over by Shares Magazine; Shares Magazine was generally awful by comparison). I think PIs got a lot more bang for their buck 10-15 years ago.

Hi Somm, I've not used stop losses for years (because I got burnt and they seemed to be ineffective when there were large price drops). Looking at the ii help section it says:

"... Stop loss orders sell shares automatically if the price drops to a certain level. Stop loss orders can help you to reduce losses on your investments. As soon as the price falls to your limit, we will look to sell at the best market price available at the point of execution. Please note that the price may be considerably lower than the stop loss limit if the shares drop in price dramatically. This is because once your stop loss price is triggered the order becomes a 'market best' order ..."

When I last used a stop loss oder it didn't trigger a sell, even at the lower price (perhaps they couldn't find a 'market best' order). However, it doesn't invalidate my point. Namely, that if the price opens below your stop loss price, then the price you get is unlikely to be your stop loss price (indeed, it could be considerably lower) because the stop loss price isn't a guaranteed price. As I say, spread bet firms do offer a guaranteed stop loss but they charge extra for the service (but I've never used).

So, in answer to your question, perhaps your stop loss will kick in on HL but that does not necessarily mean that you'll get your stop loss price (I'd be very surprised that it did because the only party that can cover the difference bewteen your stop loss price and the opening price is your broker). I'd imagine that spread bet firms can guarantee your stop loss by hedging with an "insurer" counter party.

As far as I am aware, execution only stockbrokers don't generally offer guaranteed stop losses and, unless something has changed, if the price opens below your stop loss the trade won't kick in (that's certainly been my past experience with ii).

Spread betting firms do offer guaranteed stop losses but they charge more for the service (larger spread).

Somm, Stop losses don't generally work like that . Unless they are guaranteed, if a share price opens below someone's stop loss then the stop loss won't be triggered (I've been burnt like that in the past); doesn't matter whether it's AIM or the main market.

The original consolidation plan saw AV paying dividends of c31.5pps for FY22 and c33pps for FY23 but, following the change in the consolidation ratio, these figures reduced to c31pps and c32.5pps respectively.

Allowing for the £300m share (c64m shares based on today's share price) buy back announced today there will be c2,745m shares in issue. So, total dividends of c£915m for FY23 would equate to c33.33pps

I think STC has to be put into context and differentiated from Labskin.

It was my understanding that the lab in Delaware was specifically set up to process STC tests and we susbequently learnt (indirectly) that DVRG botched the STC launch i.e. they weren't able to handle the demand and/or didn't have the testing capacity that they said/thought. As a consqeunce, it bombed (lot of negative social media). The idea behind STC would still appear sound but a scale back/closure of certain operations in the short-medium term would have been a sound decision until STC could be properly re-launched. There was clearly a lot going on behind the scenes that we weren't being made aware of but GB must take the rap for the "premature" launch of STC - a PR disaster.

Although STC uses tests devised by Labskin, Labskin's primary business has been to undertake testing for the cosmetics industry and, in the absence of any information to the contrary, that business still continues to grow and thrive.

Bottom line we need an update from the BoD. Keeping stum is just not acceptable. Come the AGM, I think more than a few more will need to be shown the door. This is not an acceptable way to treat investors.

Looks as if we might be heading for the 5ps sooner than you think. The bid has just dropped 0.1p and support at 6.5p looks to be collapsing. Appears MMs are up to their usual games not disclosing all of the trades.

Believe you me, suggesting that Clive has been inept this morning is a lot better than the alternative.

45 days since the last update and he can't even assure the maket that drilling on 802 remains on track?

I'm sure that there are many "true believers" on this board who will see absolutely nothing untoward with this (and I hope they are right) but I can't lie and say that I'm not uneasy and, judging by the share price movements today, I'm not the only one; even most of the "true believers" have gone AWOL (they seem to be foregoing your buying opportunity)

I was merely pointing out that if you only listen to the hype and ignore cautionary messages then you can end up being seriously burnt. I've still got some skin in the game but have had close some spread bets at a loss today because I've set myself a limit and don't want to put in any more collateral to meet margin calls; I suspect that I'm not the only one. Then you've got to think about those who got in at (say) 5-6p who are seeing their "book" profits being eroded; they'll ne the next ones to the door if the price keeps slipping.

Bottom line; if 802 is a bust you can probably expect a further 40-50% fall from here, at least in the short-term, because that's what the market always does with small-cap oil explorers (it always over reacts to bad news and any preceding price falls are generally ignored). We're not testing the bottom; we're just setting a new low.

That's why I'm irritated with this morning's RNS. If 802 is going to plan (as we all hope) then IMHO Clive has needlessly allowed (yet more) uncertainty to creep into the equation. Let's not forget that the boat is simply the "cherry on top", not the cake, and whilst Clive has been falling all over himself trying to keep us updated on the boat charter he's been keeping totally stum on the first order of business. There must have some progress, one way or the other, by now.

Mine tell me that you are quite happy to put your head in the sand and only listen to what you want to hear ... exactly what happened to some of the original investors in ROXI from all accounts