SIVB SVB Financial Group Buyout or Bail Out, the only options!
SVB was the second-largest banking failure in the history of the United States!
Only 2.7% of Silicon Valley Bank deposits are less than $250,000. Meaning, 97.3% aren't FDIC insured, resulting in over $160 billion of uninsured customer deposits.
Roughly 50% of the US venture capital-funded startups are clients of SVB, potentially putting 65,000 startups at risk of payroll disruptions. Such a situation could have significant consequences for the startup and tech sectors. SVB did business with FTX, plus many other formerly overvalued tech companies. With $210 billion in assets, SIBV was the 15th largest bank in the US in terms of deposits.
SVB held $91 billion in bond portfolio, classified as “held-to-maturity” securities, with an yield of 1.78! SVB CEO Greg Becker explained that the bank was selling its available-for-sale bond portfolio for $21 billion due to anticipated sustained higher interest rates, challenging conditions in both public and private markets, and elevated cash burn levels from its clients. This move resulted in a total loss of $1.8 billion for the bank.
I think we are going to see a government take over of SIVB SVB Financial Group on Monday.
In case they don’t do that, a 1929 styled bank run starting tomorrow!
So i don’t think they have a choice other than bail out SVB Financial.
In case of a Takeover, the buyout area should be $12.75 - $32. This is my Price Target for SIVB.
2020 Covid Lockdown level was $128 so the stock is Still expensive right now!