Wednesday, June 7, 2023
HomeVideoBloomberg: SVB a 'One Off' Linked to Tech Bubble: Algebris CEO Serra

Bloomberg: SVB a ‘One Off’ Linked to Tech Bubble: Algebris CEO Serra


Davide Serra, founder and CEO at Algebris, calls the reaction to Silicon Valley Bank “pure panic,” and sees the firm intimately linked to the Silicon Valley and tech bubble. He speaks with Francine Lacqua on “Bloomberg Surveillance Early Edition.”

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Transcript

Rising interest rates have left some of these Banks David of course with some of the low interest funds that they cannot be sold in a hurry without losses we’re seeing a lot of the European Banks slam Deutsche Bank down more than seven percent the same for HSBC down five percent is this Justified

Listen this is just pure panic because what has happened in this two small California silicon based Valley firm one was intimately linked to the crypto world we know what a huge fraud FTX has been and that’s basically the Silver Gate demise in the case of Silicon Valley Bank First

Of all the name says it all it’s a Silicon Valley Bank this Bank tripled its deposit in one year now this doesn’t happen to anyone in the world and basically they got deposits out of VC and then this bank was lending money so it was part of the DC bubble in Silicon

Valley then what happened they had to buy treasury so they didn’t make mistake they bought very safe assets with a sharp rise in interest rate forced them to realize some are to Market losses because eventually the same VC the deposit of the money panicked so I think

It’s one of intimately linked to the Silicon Valley and Tech bubble and reminds everyone they need to keep your deposit yep Diversified right and this is a point is that if you’re a small and mid-sized bank then maybe your funding is less Diversified than the others but talk to

Me about the big Banks so I don’t believe that analysts are getting it wrong or shareholders are getting it wrong and and selling off some of these big Holdings just because they don’t understand the story is there a longer term concern that the revenue will have to change because actually they’ll have

To compete higher or harder to for example you know by offering some of the higher interest you know payments to Savers to keep them there actually the opposite so I think today is a reminder but you should keep your deposits only in heavily safe deposited and you know well-regulated large institutions

When people chase returns or services in small Institute financial institutions they always run a huge risk you know the financial stability board has created a list of the globally systemically important financial institution which is the one we focus on so vhsbc the Deutsche Bank the BMP the UBS vintage the Santander these

Institutions have more Capital more regulation there is a reason then as a depositor you are safe clearly they’re not going to pay on your deposits you know the hot money uh some startup and VC firm will but then you can sleep at night and so what I think is going to

Happen is every institution around the world is going to look at it where am I keeping my deposits am I going to move them to the JP Morgan Morgan Stanley Bank of America of this world and hence if you’re being let’s say riding the crypto and Tech bubble in VC and hot

Money you’re probably in trouble many fintechs will end up being trouble I’ve always said it fintech are great for TVs I wouldn’t keep my cash flow and many institutions are going to do the same

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17 COMMENTS

  1. We went from there’s money in the bank to fractional reserve to zero reserve required. How is it legal for banks to operate when zero of our deposits in reserve. Even a lite bank run would shut down any bank .

  2. The general rule in an impeding or perceived start of a crisis is "sell now ask questions later". Its more of human pyschology of fear than "whether this is justified or not".

  3. Sounds like what they said in 2008. Everything is fine. People need to not panic. These MF are lying. We are in a financial crisis and this is the fault of corruption and greedy Corp profits.

    Allegedly, this isn't financial advice. :-/

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