skierincolorado wrote: ↑Tue Mar 28, 2023 9:33 pm
Has anybody seen how SVB bondholders made out? I assume they will be wiped out, but one article said FDIC was looking to dispose of the remaining 90B in assets in a way that minimizes losses to themselves and investors. Hopefully the part about protecting investors was a mistake in the article.
Well SIVB bond holders are owed money by the bank holding company, not the bank. That entity has several billion in cash, as well as some other VC-related businesses that seem to be valuable (wealth management, etc), and of course also owed the now worthless bank. One small sticking point, over which $10M’s at least in legal fees will be wasted, is the issue that $2B worth and the majority of the HoldCo’s cash is held at... their own bank that was seized by the FDIC.
And guess who isn’t on the list to get fully repaid in the SIVB bailout? That’s right, the FDIC is holding all those billions hostage and I think the lawyers managed to force them to give <10% as an advance to the holding company so they could, amount other things, fund their efforts to try to win the right to the rest in due course in the courts. Bonds were trading at around $0.50 on the dollar, give or take, but this isn’t exactly the same as a bond holder in the bank since the holding company isn’t the bank / seized entity.
The deal with citizens was quite bad. Citizens stock was up 55%.
They were the only bidder, and of course it was a great deal for FCNCA. The FDIC doesn’t want to run a bank themselves, and given all the risks of buying billions in assets that contributed to the last owner blowing up, and buying them during a time of high financial stress, you better have a clearly great deal for the buyer... if only so that they don’t get a run on them due to having bought too much illiquid high risk stuff.