10k Words - SVB Special
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
Figure 2: SVB's QoQ period-end total client funds (TCF) by client activity in $US billions
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
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