We would love to hear your thoughts about our site and services, please take our survey here.
And of course, being in the age of social media and misinformation, this is adding fuel to the fire big time. FNB average individual account balances are below $200K anyway. Deposits are insured upto $250k, so it literally makes no sense to withdraw if you hold less than 250k.
But in panic mode, rationality of course goes out of the window. You see a big queue at the bank...you are going to join it. Just like the petrol fiasco and the idiots buying up toilet roll a year back? How that started is still a mystery to me.
Beautiful. Near 5% discount. I'll have some of those thankyou very much.
I'll have a play with fist national Bank today. On the surface, the bank finances are actually not bad at all. Their makeup is completely different to SVB.
But this is what panic does....perfectly good banks can succumb to panic in the form of a massive Bank run. Nethertheless, if this little episode subdues, first national Bank looks to be an absolute steal right now
Of course, im not talking about a relatively small amount like 85k. I'm talking about sums vastly over govt protection that runs into millions/tens of millions (most of SVB corporate clients and a lot of individual clients). Who would let $10m sit in an account when news is released ( from a credible source) that the bank has to sell assets at a loss to cover withdrawal requests? Sure, you know that if everyone panics then the bank is doomed, but you would immediately withdraw funds. There is no doubt about it
Twitter-lead bank run....I like that. But you can't take away the fact that SVB caused this and their mismanagement are solely to blame, and I dont for one second blame the participants of the bank run. In this industry, the slightest hint of trouble looming (and there was the biggest hint possible in the form of selling underperforming assets at a loss to cover withdrawal demands), it will cause twitchiness and people to draw deposits "just in case". You would do it, as would I! As one put it, there's no risk pulling a deposit just in case and redepositing once all is fine, but there's all the risk in the world if you leave it put.
Eventually, SVB would have found some sort of liquidity from somewhere to plug this lack of cash, but then again once they are at the point of having no cash, however they attempt to raise funds will send alarm bells ringing, and a bank run at lightning speed will ensue. A more interesting interesting question is...If social media didn't exist, or this happened back in the 90s, would this have happened? I suspect no. But that doesn't mean the bank was "unlucky" as we are not in the 90s, and they cucked up big time. No bank should ever be in the position to not be able to meet short term deposit outflow obligations. How on earth did they pass stress testing for this to happen? How were they allowed to keep such low yielding assets whose value was rapidly deteriorating on the balance sheet? So many questions need answering as they were not a tiny outfit.
They cant just dump 200bn of mbs and bonds overnight as that could tank the market and cause waves. Thats predominantly why the us federal government stepped in; for an orderly wind down of these assets as to not cause any reverberations as SVB could no longer contain the runaway bank run and panic.
But on the macro scale, thats as far as this will go. Theres simply no way mainstream banks will face this problem. Banks that are classified crucial for a functioning society are under such tight restrictions that barring a mass panic of epic proportions, they simply can't run out of cash and be forced to firesell underperformimg assets. If (very very very very unlikely) a bank such as JPMorgan or hsbc reported this issue....it would be 2008 on steroids and we wouldnt be talking here, we would be desperatlely pulling deposits from every account we own. Fortunately, the US govt will fence in SVB, or at the very least stop the travel upwards. But with many fintech banks and small startups in the financial sector, who knows how many of these could have similar issues where they have blown all deposits on low yielding assets, with no new inflows to diversify and increase PF yield. When you deposit money with these companies, unless they are backed by FSCS you put your money in the hands of the CEO and their competence. But this will certainly bring in new levels of scrutiny for this sector, despite govt lobbying for red tape to be cut to bring in innovation to this sector. But this incident once again highlights the massive risks involved if you let your guard down.
There will be repercussions for companies/individuals who have huge sums tied up here however...and we will find out how deep of a hole SVB put themselves in. I expect many will be forced to take a haircut, perhaps even a buzz cut.
A lesson out of all of this. Dont put all your eggs in one basket. Those fortunate enough to have over £85k in cash deposits....diversify. This way, your deposits are backed by government and no matter what happens...you get your cash back.
As for companies who had millions tied up in this bank who say they can't make payroll....they should find a new CFO. Unacceptable risk to not diversify deposits and have contingency accounts for such an event.
RIP Silicon Valley Bank! But what a way to go! Having to distress sell assets in the red to cover deposit outflows because someone thought it a good idea to load up to the max on low yielding MBS and other such assets.
Now the music has well and truly stopped, and SVB are the first casualties. Makes you think what other smaller banks have been a tad too indulgent in 2021 with incoming deposits. Even a hint or rumour of trouble can topple a bank with billions in assets, and once that bank run ball starts rolling...its all over. Times like this should be a boon for banks. Banks with razor thin NIMs and low, uncompetitive deposit rates are a tell tale sign of deposits locked up in low yielding assets and warrants further investigation.
A gift from the heavens. Exactly what I was waiting for to purchase more of these shares.
If they go lower....I buy even more. The last season of results plus increasing dividend paints a rosy picture. Market always acts knee jerk and tarnishes everything with the same brush if the company so much trades an apple or lends a banana as far as bank wobbles go.
Svb has been playing fa's and loose with client money for years. Greed always catches up with you. Dumping virtually all customer deposits in all time low yielding mbs. Dear oh dear.
153.5 buy this morning looking solid. See this all the time. You can't compare SVB with major banks. They are an entirely different animal with an entirely different regulatory landscape.
It reminds me of last year when financial news outlets were asking questions of why monzo dont earn interest in its 1+billion pounds of customer deposits....Well here's why they didn't, and now they can lock in a decent NIM and some very competitive deposit rates, drawing in even more deposits. Well done monzo for not playing hard and fast with customer deposits!
SVB fcuked up big time. What brainiac thought it was a good idea to dump a vast quantity of deposits into MBS earning just 1.5% or so? They couldnt lend deposits fast enough to satisfy their greed? Obviously the speed of interest rate increase has been rapid....but to dump virtually all deposits into such low yielding MBS at an all time low fed rate during the mother of all asset bubbles....dope got to someones head over at cali.
An unforgivable mistake and now they are in serious trouble. Someones neck needs to be on the chopping block for this cuckup. I move money around a lot to find the best deposit rates for my money, and SVB clients are far more likely to do this than your big banks. But there is no contagion here. Firstly, big banks already pay rubbish deposit rates....those who have sense have long left the room. The ones who stay are not likely to move now, so a bank run in the large banks make no sense. Secondly, large banks are far more diverse, and have far more regulatory safety nets to manage such a run of this nature.
Load up on household bank names whilst you can!
I really hope there is a mass exodus of BTL landlords! Then the govt would be forced to act and get their building hats on to address the rapid increase in homelessness and poverty stricken famies.
Ever increasing rents and ever decreasing supply of properties....doesn't take Einstein to work out what will eventually happen. BOOM!
I agree there are large gulfs in profitability and affordability of BTLs based on the north/south divide, and some cheaper pockets of the country still remain profitable.
But like a sponge, interest rates are soaking up margins until fully saturated. And it's not just about profitability, it's the significantly heightened risk in terms of tenant default probability vs rental price which has to be at an all time high now. If I were a BTLL, I would be very fearful of rising rents. So BTLs are rightly asking, is a couple of hundred a month worth the massively heightened risks coming in from all angles, not to mention the risk of principle downpayment being wiped out on interest only, as a btl interest only is essentially using leverage. Great for rising property prices, not so great for declining.
For example, the highest paid easy access accounts now pay out 3.3%! A 1 year fix at 4.5%! I know where my £100k would go. An absolute no brainer IMO as opposed to BTL.
And I simply dont buy the whole chorus of BTLs bridging the gap between lack of social and housing needs. Yes, they do in todays world....but if they stopped existing, the government would simply be forced to act like they did post war because they would have to, or risk civil unrest and instability on a massive scale! It's shame that things would have to get really bad in terms of homelessness for this govt to act however and start building affordable homes. And dont get me started on RTBs....a good idea in the 80s, but should have died along with thatcher. Completely defunct policy this day and age. God knows how someone can live in social housing and be able to afford to buy? So many things wrong with social housing and who can live in them. They ought to be strictly means tested. Far too much common sense for this govt though.
"I dont think anything of what I am saying is hype, it's evidence based"
I'm sure we would all love to see this evidence of a miraculous summer recovery.
The banks are not stupid, look how all the cheaper trackers have dissapeared and now focusing on 5 year fixes, locking in these higher rates for 1st timers. This tells you that banks see change on the horizon and expect rates to drop further, but I don't see first timers suddenly enriching themselves as to afford such earnings/price ratios that are currently being being asked, even if interest rates drop from 5% to 4%. Because with a little perspective, this is still a monumental increase, and property prices are surprisingly not dropping that much. If I were to put an offer on a property now, I would ask for 10-15% discount for starters. If the service charge is sky high, even more. Data coming out of rightmove is about as much good as a chocolate fireguard, as asking prices for most properties are just not realistic. Wait for ONS or nationwide data which actually reads the sale prices.
Because from where I am standing, all evidence points to a dismal property market for at least another year, with further pain to come.
Rental markets are certainly no saving grace even in the medium term. Its a ticking time bomb. There is only so much you rent you can extract from tenants. Then suddenly boom....reposessions skyrocket, which means potentially a year of no rent with court backlogs and forced sellers of unprofitable BTLs. More supply = price drops. More reposessions = more pressure on govt to cap rent (which should have been done a while back). A tenant should not be paying for your poor investment choices!
The only good thing is unemployment remaining low. But how long will that last with interest rate hindering growth, and reversing it?? And how much of this employment is actually quality employment, ie not zero hour?? Look at the trends between number of people on zero hour contracts vs unemployment rate. We are all being systemically lied to re the real state of the jobs market (same trend in usa) Unless you count delivering a mcdonalds as employment, like employment rate measure does! The definition of employment according to ONS has evolved a new meaning as time has gone on.
Will be very interesting how this is all managed at the end of the day.
Not great that the SP crashed through 13.8. The bounce yesterday and subsequent retest of 13.8 failed, and now 10p is in the cards.
You now have to look back to march/Apr 2020 when solg was this low. And there's a big gap right the way down to 10p. I can't see any appetite for buying until March 2020 low of 10p is hit from a technical perspective. If there is no news releases, this will undoubtedly be walked down until this technical support is hit.
As for today's news, it just adds to the narrative regarding the boards incompetence.
From these beat up stocks.
I hold thg, asos and boo. A small percentage of pf, but certainly enough to keep me interested.
Also good noises coming out of the fed re inflation. When this is reflected in the data, then these beaten up stocks will begin to motor
Indeed. Certainly a more optimistic take on the matter. However tracker mortgages should not be confused with a fixed term discounted SVR rate. Both are completely different.
The former has is tracked against an underlying index, I.e. BOE rates. The latter can change at the bank/building societies whim...at best are loosely tracked to BOE/own SVR. Smaller building societies with top discounted SVR's of c 3.5% look good on the surface, but dig a little deeper and the inherent risks are there for all to see. Firstly the gaps are much wider between the discounted SVR and their standard SVR. If you can't remortgage at the end of the fixed period....you are in big trouble. Also, due to these sorts of institutions not needing to compete as much as they usually offer bespoke mortgages, even if BOE rates drop, their standard SVR could remain sky high, thus mainstream bank fixed/discount SVR rates could very quickly overtake your discounted SVR with one of these bespoke building societies and there is little that can be done about it.
I would always opt to go for a more mainstream bank unless of course your circumstances require a bespoke solution. I wouldn't get suckered into lower discounted SVRs with these building societies i have never heard of. There's a reason why mainstream banks discounted SVR is much less and the gap between standard and discounted is much less.
But yes, my money would be on a 3 year discounted SVR with a major bank if I had to mortgage right now. That should see you through current troubles, and hopefully allow you to fix a lower rate at the end whilst avoiding higher rate fixes currently.
Where is all the "it's different this time" gang? The funniest ad was in london at the very peak of the bubble, and read "if you see crypto advertising on london underground, you know its time to buy". I of course crossed out the buy and replaced with black graffiti SELL.
Being one of the very early adopters of bitcoin back in 2010, and looking what has happened now, the whole idea and concept of cryptocurrency has completely lost its way. Satoshi has unwittingly created a monster; a plaything for speculators and institutions alike.
The whole idea was a deregulated, definancialised value conduit away from government intervention, manipulation or financialisation and thats it! Its really quite simple really. But It has become everything but! Everything that has come since is a cancer on the idea of bitcoin, and is an insult for bitcoin to even be categorised with 99% of the utter garbage that has ensued since. Governments control cryptocurrencies by proxy, their puppet platforms who bend at their will If it means they can make a little more profit. Who uses a core wallet? Who here even knows what a core wallet is/was?
After FTX, I really hope cryptocurrencues go backwards to basic, grassroot principals. They must go backwards to move forwards again, and people need to educate themselves on why bitcoin was created in the first place!