Great analysis of SVB’s downfall, as usual by FT Alphaville. With some additional comments on Credit Suisse (a completely different situation).SVB was a classic case of Assets / Liability mismatch, 101 of bank risk management.
On the Liabilities’ side, a huge concentration on uninsured deposits (96%); The Assets side was heavy on long term Hold to Maturity bonds, valued at par. Aggravated by the lure of illusive hedge profits instead of prudence with a long term view.
We don’t need more regulation, on top of the existing thousands of pages, but more attentive supervisors and better reporting rules (HTM LT bonds at par without any bells ringing is simply stupid).