An Post/State Savings will let an individual put €250k on deposit. Apparently a company can put €5m on deposit. For higher amounts, one presumably should find a bank with the strongest balance sheet, and which is likely to be considered systemic, aka too big to fail.I was wondering where they will put it?
OK, so if I take my millions out of Silicon Valley Bank and put it into AIB. Now I am worried about AIB, but where do I go with it?
I can't take it out in dollar notes and keep it under the bed.
Brendan
But the central banks already large holders themselves of government bonds, that was how they depressed interest rates.It's what happened in the UK with the LDI debacle.
It "works" for the Japanese...But the central banks already large holders themselves of government bonds, that was how they depressed interest rates.
Then in this case they also need to buy the bond holdings of the banks .
Is this not a problem, I understand that alot of the Irish government bonds mature in 2030. Theoretically bringing this to its logical conclusion the only effective buyer of the bonds will be the central banks . This will be what happens if inflation and interest rates keep rising?
Not all banks are equal. And why limit it to one bank... I might not get the best deposit rate on the market but better to forgo some interest versus loosing a large chunk of the balance.I was wondering where they will put it?
OK, so if I take my millions out of Silicon Valley Bank and put it into AIB. Now I am worried about AIB, but where do I go with it?
I can't take it out in dollar notes and keep it under the bed.
Brendan
I have emphasised what really surprised me. I know no-one who thought bond prices with those QE induced yields were fair value. How did such a major institution get "duped" by it.JPM said:The irony of SIVB is that most banks have historically failed due to credit risk issues. This is the first major one I recall where the primary issue was a duration mismatch between high quality assets and deposit liabilities. As shown below, being flooded with deposits from fast-money VC firms and other corporate accounts at a time of historically low interest rates might have been more of a curse than a blessing • I wonder whether Fed models on systemic risk incorporate the possibility that some banks would be duped into thinking that QE-induced rates prevailing in 2020 represented fair value, and would load up on them
Some depositors wanted their money - more than the bank had cash for. Not necessarily a bank run they might have wanted it for operating their own business. In order to be able to pay out svb needed to sell something hence why they were forced to realise a loss on the bonds.I understand most aspects of this bank's troubles, except one thing: why did they sell the bond assets at a loss? Why not hold until maturity?
Yes I read a good article about it yesterday, they had a woman employed in risk management but she resigned last year and wasn't replaced for nine months also alot of corporate bonds not just government bonds and these were very difficult to sell quickly. However it showed how fast a bank run can happen in the modern era, $43 billion was withdrawn from the bank in 24 hours, no bank could sustain that. There were no queues outside the bank like 2007 with Northern Rock this was all withdrawn online. Maybe they will have to put withdrawal limits on all bank accounts to prevent a panic and a bank run like this oneThe principal problem with SVB was very bad risk management on the part of the bank executives and management
There is a scene in Mary Poppins which should be compulsory viewing for bankers every few years.
The Saudi fund that had 10billion invested in the bank will also be big losers out of this.Additional Tier 1 bond holders giving out that their 17 billion of Credit Suisse notes are now worthless is priceless......Like seriously???
They have got a point about €3 billion going to shareholders though.....I don't know enough details about the deal but this does look like they are trying to bypass the capital structure.....
Yes, plenty of discussion on that. AT1 bonds are apparently an invention borne of the GFC. They appear to allow, I think the authorities, to write them down to zero if certain capital ratios are not met i.e. not necessarily that the bank is insolvent. It only happened once before but the shareholders were also wiped out in that case. I think this is a first.Additional Tier 1 bond holders giving out that their 17 billion of Credit Suisse notes are now worthless is priceless......Like seriously???
They have got a point about €3 billion going to shareholders though.....I don't know enough details about the deal but this does look like they are trying to bypass the capital structure.....
Yes, plenty of discussion on that. AT1 bonds are apparently an invention borne of the GFC. They appear to allow, I think the authorities, to write them down to zero if certain capital ratios are not met i.e. not necessarily that the bank is insolvent. It only happened once before but the shareholders were also wiped out in that case. I think this is a first.
This seems to be the role of Treasury Management departments in larger companies, not sure if there are off-the-shelf solutions in Ireland for smaller entities.OK, so if I take my millions out of Silicon Valley Bank and put it into AIB. Now I am worried about AIB, but where do I go with it?
I can't take it out in dollar notes and keep it under the bed.
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