Silicon Valley Bank (UK)

[Protagoras]

All deposits should be 100% guaranteed without this 85k stupid limit - banks are regulated by Govt and it’s Govts job to ensure that depositors are 100% safe

There does need to be a balance between the moral hazard of unlimited protection, and the UK level of £85k which is such that small business and retail depositors need multiple bank accounts to manage deposit risk.

Events such as bank failures remind depositors of the risk and in response it's rational to diversify deposits.
The UK government could increase immediately the level from £85k and this would have the effect of suppressing the extent of the withdrawals.

[AtW]

There does need to be a balance between the moral hazard of unlimited protection, and the UK level of £85k which is such that small business and retail depositors need multiple bank accounts to manage deposit risk..

Moral hazard? Money should be protected - especially big money because they are far more mobile, it’s not good for this country if big firms start keeping capital outside of UK and only send in money from Switzerland for current spending, that would mean YUGE capital outflows - forever

[jamesbrown]

It’s stability of the whole deposit system that is at stake - FSCS should not even exist, all deposits should be 100% guaranteed by Bank of England

P.S. Budget on Wed, unless they nip this in the bud and claim a one off (blame VCs who made firms open account in SVB)

It's the legitimacy of the whole deposit system that's at stake if they bailout these VCs. The moral hazard is enormous:

https://twitter.com/nickmacpherson2/...DT-daimbAtAAAA

I do blame the VCs who required an account with SVB, which is why these VCs should lose their shirts, but the companies that agreed to these terms cannot escape the decisions they made.

[AtW]

Deposit protection system is fake and unworkable because it formally guarantees small amount of money that bears little relevance to many firms - if firms to bust - everyone else will go bust, so implicitly ALL money guaranteed (by virtue of bailout of bank or just depositors), if that’s proven wrong then we are fecked

Maybe 10% haircut on deposits over X is ok, but thats it

[jamesbrown]

Deposit protection system is fake and unworkable because it formally guarantees small amount of money that bears little relevance to many firms - if firms to bust - everyone else will go bust, so implicitly ALL money guaranteed (by virtue of bailout of bank or just depositors), if that’s proven wrong then we are fecked

Maybe 10% haircut on deposits over X is ok, but thats it

Nonsense, any company that distributed their funds across many banking licenses is not facing an existential threat, merely an unfortunate loss if they also had funds with SVB. It isn't solely about the £85k limit, which is obviously a tiny amount in corporate terms, it's about distributing your funds carefully to avoid existential threat. That includes using bigger banks that are systemic to the wider economy. Any company that deposited a majority of their funds with SVB is facing an existential threat and rightly so.

[AtW]

Nonsense, any company that distributed their funds across many banks is not facing an existential threat, merely an unfortunate loss if they also had funds with SVB. It isn't solely about the £85k limit, which is obviously a tiny amount in corporate terms, it's about distributing your funds carefully to avoid existential threat. That includes using bigger banks that are systemic to the wider economy. Any company that deposited a majority of their funds with SVB is facing an existential threat and rightly so.

If Barclays or Lloyds got same bank run, would they get bailed out?

We know the answer is yes

There will be depositors bail out in UK for sure, or we are are fecked.

[jamesbrown]

If Barclays or Lloyds got same bank run, would they get bailed out?

We know the answer is yes

Is this an argument for holding a majority of your funds with a tiny bank that is not systemic to the economy? If so, it's a piss poor argument.

[jamesbrown]

There will be depositors bail out in UK for sure, or we are are fecked.

I'm not saying they won't be, I am saying they shouldn't be because they risked everything, even with risk managers at board level (), and there is a bigger threat if casino banking is underwritten by the Treasury. I really hope they are "fecked", but I highly doubt our current gov't has the presence/insight to see the long-term costs.

[vetran]

apparently his muskiness is interested in helping. should make loads of people happy!

[AtW]

Is this an argument for holding a majority of your funds with a tiny bank that is not systemic to the economy? If so, it's a piss poor argument.

It’s still a bank - licensed to act as such by authorities who must pick up risks or deposits going - in full, then bank runs will not happen, one less problem the economy needs.