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Started by Waltzing, Feb 02, 2023, 02:17 PM

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Waltzing

#15
Some bargains turning up? NAY.. stay away from the regionals

https://www.cnbc.com/2023/03/13/first-republic-drops-bank-stocks-decline.html
 
Gundlach saying QE is back.  FED will have to expand balance sheet and we now know all deposits are covered... ALL

and that means moral hazard is BACK baby its BACK!!!

the FED's inflation fight is now between a printing press and a paper forest....

Trading is back in business baby...

https://www.youtube.com/watch?v=0y-_WGjZgD8

Waltzing

and we were all musing about LTCM not a week ago ...

every time the FED raises rates it cracks the market well at least since the later 90's...

count that on one hand or less...

https://edition.cnn.com/2023/03/13/business/svb-employees-angry-at-ceo/index.html

that the end of the fast rate hikes then...

lorraina

I guess we will follow the USA.
Yahoo Finance headlines.

"Bank stocks rally in sharp reversal from previous session"

May have been a bit like a Briscoes' one day sale.?

Basil

Except that regional banks in the US as measured by the index of same were down ~ 25% before that rally.

lorraina

#19
Ord Minnett notes two distinct differences between SVB and Australian banks:

SVB customers are concentrated towards concentrated and lumpy deposits whereas household deposits make up 40% to 50% of deposits across major Australia banks

SVB had a large percentage of their assets held in investment securities, which were out of the money, whereas Australian banks primarily invest in mortgages and corporate debt

"We do not believe the conditions that allowed a run to happen on SVB exist for Australian banks," the report said.

Guess the same goes for NZ Banks.
Winner69 did point out NZ Banks match borrowings with lending .

KW

#20
The US crisis has nothing to do with who their customers were or what their deposits were - this one is a straight up old school problem of bank liquidity in the face of a bank run.  SVB (and most banks) have two types of securities - those Available For Sale (usually hedged to manage short term risk) and Held To Maturity (usually not hedged because the bank expects to be paid back at par).  In the face of a bank run, all the Available For Sale assets can be liquidated, but if they are insufficient, then the Held To Maturity assets need to be sold off, and its these long duration assets that are now well out of the money due to high interest rates, so obviously in order to sell them they will need to take substantial losses.
So the question to ask is do Aus/NZ banks have a lot of Available For Sale liquid assets and not so much long duration assets, and what are the chances of a bank run with depositors taking their money out?  Are mortgages and corporate loans short term assets or long term ones?  Are they hedged or unhedged?
SVB faced a bank run because all their customers were highly interconnected through relationships with their funding partners and each other, via chat rooms and other tech platforms, so when a couple of VCs told their companies to get their money out, they all told each other, and literally within minutes half of Silicon Valley was trying to withdraw money.  Social media makes something like a bank run on any bank possible because a rumour can spread like wildfire within a very short amount of time.  Unfortunately for NZ though, as we are a complete backwater techwise, we don't have real time bank processing so any attempt to get your money out will be unsuccessful.  Then again, maybe that might suddenly be a useful feature not a bug lol
Don't drink and buy shares in a downtrend, you bloody idiot.

KW

#21
On another note, this problem doesnt just apply to banks.  It also applies to things like pension funds. If everyone suddenly decides they want their retirement savings out, and there is a run on a fund, the same thing will occur, and probably worse as pension funds most definitely have a lot of long duration assets.  Most of the US ones are already underfunded as well. Not to mention their unlisted/private assets where market value is very opaque.  I have a funny feeling the real credit crisis that constitutes a "Lehman moment" will be a pension fund not a bank.

And now that 5% term deposits at a bank are Govt guaranteed for infinity, what is stopping pensioners pulling their retirement funds out of their pension fund  and putting it in the bank.  Its the safest place to be.  My Dad did it in NZ - only need for this idea to catch on and its game over.
Don't drink and buy shares in a downtrend, you bloody idiot.

Waltzing

Insider trader under scrutiny next for SVB...

looks like they fixed very little after the GFC.

Aussi royal commission of inquiry over the banking has opened doors on what was standard operating practise in the banking system and that has made it clear that bank profits on the ASX have problematic for sometime.

 

Waltzing

If Credit Suisse goes as has been said here before than any inflation fighting moves are to slow down and is that good for retail and COMP Props?

Sure should put a floor under the COMP Props.

Waltzing

#24
And is there going to be more ...

https://www.cnbc.com/2023/04/26/first-republic-rescue-pitch-help-now-or-pay-more-later-when-it-fails.html

""Time, by the way, is not the bank's friend," analyst Don Bilson wrote Tuesday. "If anything, last night's discouraging update will make it even harder for First Republic to keep what it has."

lets rewind a bit ... memory lane ...

https://en.wikipedia.org/wiki/Long-Term_Capital_Management

its trouble in the USA ...

https://www.youtube.com/watch?v=EPhWR4d3FJQ


Waltzing

ANZ 81 cents AUS DIVIDEND!!!!!!!!!

this is the big news of the day people...


Waltzing

ANZ 81 cents AUS DIVIDEND!!!!!!!!!

this is the big news of the day people...

 did we say this already !!!

Waltzing

.... on the streets ... on the streets

look up ... look up....

Waltzing

pressure still on in the US for regionals and the Cryptos finally had a bad few days....

the worlds markets for bank share are  wild choppy seas.

Waltzing

#29
... pac west down 22 today... its only a small bank and its got balance sheet capital that covers its deposits..

banking system deposits over all down 5 percent...  and thats bigger than the fed expected...

but over all deposits in the US are higher then in 2008...
 
https://www.cnbc.com/2023/05/11/pacwest-shares-tumble-20percent-after-regional-bank-says-deposits-fell-9point5percent-last-week.html

lots of bank mergers likely in the US?

you would not want to be invested heavy in US banks...