Now collapsed SVB's parent files for bankruptcy as Biden calls for stiffer penalties
- Reference: 1679078364
- News link: https://www.theregister.co.uk/2023/03/17/svb_financial_chapter11/
- Source link:
In a [1]statement on Friday, SVB Financial Group said it had filed a petition for court-supervised reorganization under Chapter 11 in the Southern District of New York.
The filing would allow it to explore selling its SVB Security brokerage biz and SVB Capital investment platform company. That is to say, it'll be able to pick out the bits that are still viable and flog them off.
[2]
"The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities," said SVB Financial Chief Restructuring Officer William Kosturos.
[3]
[4]
At the time of the filing, the company said it has approximately $2.2 billion of liquidity, in addition to cash and interests held by SVB Capital and Securities. Those divisions, the defunct bank notes, are exploring "strategic alternatives" beyond Chapter 11. SVB Financial Group claims approximately $3.3 billion in aggregate funded debt, and about $3.7 billion of preferred equity outstanding.
While the group has already sold off its UK arm to HSBC for a single British pound, the company notes that any potential sales within the US will be conducted through the Chapter 11 bankruptcy proceedings and subject to court approval.
[5]US government says Silicon Valley Bank depositors can get their cash on Monday
[6]Silicon Valley Bank's UK arm bought by HSBC for 1 British pound in rescue deal
[7]SVB collapse's mix of money, urgency and uncertainty makes it irresistible to scammers
[8]Silicon Valley Bank seized by officials after imploding: How this happened and why
The filing comes exactly seven days after SVB's [9]collapse and subsequent take over by the Federal Deposit Insurance Corporation (FDIC), which insures deposits up to $250,000.
While this might be reassuring for most. SVB wasn't your typical bank. Once a favorite among venture capitalists and tech startups, it counted around half of US venture-backed tech and life sciences companies as its customers.
[10]
It's reported that the vast majority of the bank's customers had deposits well in excess of FDIC protections. This caused something of fervor last week as companies reeled over the prospect of losing potentially massive sums of money in the collapse.
However, last weekend the Treasury Secretary Janet Yellen [11]approved measures that allowed the FDIC to protect customer's deposits in their entirety, with the exception of shareholders and certain unsecured debt holders which would not receive protections.
In a joint [12]statement , the Treasury Department and Federal Reserve emphasized that none of the losses would be borne by taxpayers.
[13]
Even so, the bank's failure continues to have ripple effects throughout the broader financial industry. On Friday, US President Joe Biden [14]called on Congress to enact stiffer penalties on banks that mismanage their customer's funds.
"When banks fail due to mismanagement and excessive risk, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again," the US president said in a statement.
"Congress must act to impose tougher penalties for senior bank executives whose mismanagement contributed to their institutions' failing." ®
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[1] https://www.prnewswire.com/news-releases/svb-financial-group-commences-chapter-11-proceeding-to-preserve-value-301774997.html
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZBTxEBBG3pNJNPB123qGKQAAABY&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[5] https://www.theregister.com/2023/03/13/svb_deposits_all_available_monday/
[6] https://www.theregister.com/2023/03/13/svb_uk_hsbc/
[7] https://www.theregister.com/2023/03/15/rise_in_svb_related_domain/
[8] https://www.theregister.com/2023/03/10/svb_silvergate_banking_fdic/
[9] https://www.theregister.com/2023/03/10/svb_silvergate_banking_fdic/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZBTxEBBG3pNJNPB123qGKQAAABY&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2023/03/13/svb_deposits_all_available_monday/
[12] https://home.treasury.gov/news/press-releases/jy1337
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZBTxEBBG3pNJNPB123qGKQAAABY&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/17/statement-from-the-president-on-holding-senior-bank-executives-accountable/
[15] https://whitepapers.theregister.com/
Re: De ja Vue
The lesson of history in general is that the lessons are never learned.
"When banks fail due to mismanagement and excessive risk, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again,"
That sounds good on the campaign trail at least.
Don't expect Congress to enact any laws that actually hold bankers responsible for their actions. That would be Un-American. After all, the money comes from the bankers, and how are the little white envelopes going to be filled without that money?
I agree, but President Biden seems to be doing some swimming against the current lately. Just keep swimming? It's all so weird...
too lazy to look
Did his muskratiness borrow money from this institution? Enquiring minds and all that... The pieces of the big picture are starting to fall into place. Perhaps a great world crisis is upon us? Just like my daddy said, and his daddy before?
Damn, I miss Paris!
Re: too lazy to look
Their problem is that NOBODY borrowed money from them. Banks make money on loans and lose money on deposits.
All their customers deposited the $MM from VCs, those sat in the bank paying 0% interest. The bank needed to raise money to pay wages so bought long term US government bonds paying 1% - the safest thing you could possibly do
Then all their customers began taking money out of their accounts to pay their bills, and no new money came in
It might sound fun on the internet for the government to let them go bust. Keep the bonds they bought and make a profit - and destroy the USA's tech and biotech industry
Re: too lazy to look
fuck em
and if you keep demanding the public cover capitalists losses, then fuck you too
Quell surprise.
Big war is coming as it has done through the centuries. It's the way we deal with unlimited growth. It can never be unlimited. Banks will fall. Banks will still profit. People will fight for a way of life that is not their own.
Will there be wailing and gnashing of teeth ?
Will the seas be as of blood?
Will the mountains crumble ?
No one is going to take the Nuclear option that's for sure.
There will however be people that run out of toilet roll in any conflict. That is for sure.
De ja Vue
Have we not been here before?
And not learned the lessons?