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10k Words - SVB Special Equitable Investors March 2023 Almost half of the US VC universe banked with Silicon Valley Bank (SVB) and the bank was upfront in disclosing that "client cash burn remains ~2x higher than pre-2021 levels and has not adjusted to the slower fundraising environment". It also wasn't a secret that SVB held long duration debt investments that it had not marked-to-market. If it had its capital adequacy would have been brought into question immediately. SVB is unique in terms of its narrow base of clients - the vast majority of its deposits are not covered by the FDIC's $US250,000 insurance per depositor. Figure 1: SVB's market position
Source: SVB Figure 2: SVB's QoQ period-end total client funds (TCF) by client activity in $US billions
Source: SVB Figure 3: Impact of unrealised securities losses on capital ratios - Q4 2022
Source: JP Morgan Asset Management, @TheRealDanSaedi Figure 4: SVB's deposit mix - insured and uninsured
Source: Federal Financial Institutions Examination Council, WSJ Funds operated by this manager: Equitable Investors Dragonfly Fund Disclaimer Nothing in this blog constitutes investment advice - or advice in any other field. Neither the information, commentary or any opinion contained in this blog constitutes a solicitation or offer by Equitable Investors Pty Ltd (Equitable Investors) or its affiliates to buy or sell any securities or other financial instruments. Nor shall any such security be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. The content of this blog should not be relied upon in making investment decisions. Any decisions based on information contained on this blog are the sole responsibility of the visitor. In exchange for using this blog, the visitor agree to indemnify Equitable Investors and hold Equitable Investors, its officers, directors, employees, affiliates, agents, licensors and suppliers harmless against any and all claims, losses, liability, costs and expenses (including but not limited to legal fees) arising from your use of this blog, from your violation of these Terms or from any decisions that the visitor makes based on such information. This blog is for information purposes only and is not intended to be relied upon as a forecast, research or investment advice. The information on this blog does not constitute a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Although this material is based upon information that Equitable Investors considers reliable and endeavours to keep current, Equitable Investors does not assure that this material is accurate, current or complete, and it should not be relied upon as such. Any opinions expressed on this blog may change as subsequent conditions vary. Equitable Investors does not warrant, either expressly or implied, the accuracy or completeness of the information, text, graphics, links or other items contained on this blog and does not warrant that the functions contained in this blog will be uninterrupted or error-free, that defects will be corrected, or that the blog will be free of viruses or other harmful components. Equitable Investors expressly disclaims all liability for errors and omissions in the materials on this blog and for the use or interpretation by others of information contained on the blog |
