Compliance Clarified – a podcast by Thomson Reuters Regulatory Intelligence Season 7, Episode 9: SVB collapse: what were the regulators doing?
Mar 23, 2023
22:56
The collapse of Silicon Valley Bank sent shockwaves through the venture capital and technology industries. It has had uncomfortable echoes of the 2008 financial crisis with regulators and other policymakers working through the weekend to engineer solutions to avoid further contagion and possible systemic risk. And that was the weekend of 11/12 March; this weekend just gone, regulators and policymakers were busy with the shotgun wedding of UBS and Credit Suisse.
In the UK, HSBC has bought SVB and its liabilities to the tech sector for £1, but the situation is different in the United States where the Federal Deposit Insurance Corporation has stepped in to protect all deposit holders, even though most of them (mainly venture capital firms and tech companies) have way more in their accounts than the insured amount of $250,000.
The collapse of the specialist lender has raised plenty of questions about risk management and the role played by regulators.
Most of SVB's balance sheet was in longer dated bonds and the value of these fell as rates rose, which caused the subsequent run on the bank. Few seem to have questioned why no one at the bank appeared to hedge their risk.
Events are still unfolding but with different results on either side of the Atlantic. There are many unknowns directly related to possible compliance and risk management concerns. As more facts surface, regulators and lawmakers are sure to investigate any failures in these areas. Such inquiries often lead to new regulations or regulatory change in the future.
In this episode of Compliance Clarified, Alexander Robson, managing editor of Regulatory Intelligence in London, talks to Henry Engler, senior editor in New York and Mike Cowan, senior Regulatory Intelligence expert in London.
Program notes:
Silicon Valley Bank collapse: What you need to know now: https://www.reuters.com/business/finance/silicon-valley-bank-collapse-what-you-need-know-2023-03-13/
SVB Financial files for bankruptcy protection after swift implosion: https://www.reuters.com/business/finance/how-svb-financial-group-imploded-two-days-2023-03-14/
SVB is largest bank failure since 2008 financial crisis: https://www.reuters.com/business/finance/global-markets-banks-wrapup-1-2023-03-10/
Behind the Regulatory Intelligence paywall
INSIGHT: Five important regulatory aspects of the Silicon Valley Bank collapse: http://go-ri.tr.com/S5LTLf
OPINION: Scale of U.S. banks' unrealized losses, distressed borrowing and central bank actions point to wider problems: http://go-ri.tr.com/oyHrxD
U.S. lawmakers to hold first hearing on SVB, Signature Bank collapse: http://go-ri.tr.com/7AcwNS
Compliance Clarified is a podcast from Thomson Reuters Regulatory Intelligence.
Listen to wide-ranging, insightful discussions on all things compliance for financial services firms. We delve into the hot topics of the day, the challenges faced and offer up practical ideas for emerging good practice. We de-mystify regulation and explore the art, as well as the science, of the ever-expanding role of the compliance officer. Enforcements, digital transformation, regulatory change, governance, culture, conduct risk – anything and everything impacting the compliance function is up for discussion.
In the UK, HSBC has bought SVB and its liabilities to the tech sector for £1, but the situation is different in the United States where the Federal Deposit Insurance Corporation has stepped in to protect all deposit holders, even though most of them (mainly venture capital firms and tech companies) have way more in their accounts than the insured amount of $250,000.
The collapse of the specialist lender has raised plenty of questions about risk management and the role played by regulators.
Most of SVB's balance sheet was in longer dated bonds and the value of these fell as rates rose, which caused the subsequent run on the bank. Few seem to have questioned why no one at the bank appeared to hedge their risk.
Events are still unfolding but with different results on either side of the Atlantic. There are many unknowns directly related to possible compliance and risk management concerns. As more facts surface, regulators and lawmakers are sure to investigate any failures in these areas. Such inquiries often lead to new regulations or regulatory change in the future.
In this episode of Compliance Clarified, Alexander Robson, managing editor of Regulatory Intelligence in London, talks to Henry Engler, senior editor in New York and Mike Cowan, senior Regulatory Intelligence expert in London.
Program notes:
Silicon Valley Bank collapse: What you need to know now: https://www.reuters.com/business/finance/silicon-valley-bank-collapse-what-you-need-know-2023-03-13/
SVB Financial files for bankruptcy protection after swift implosion: https://www.reuters.com/business/finance/how-svb-financial-group-imploded-two-days-2023-03-14/
SVB is largest bank failure since 2008 financial crisis: https://www.reuters.com/business/finance/global-markets-banks-wrapup-1-2023-03-10/
Behind the Regulatory Intelligence paywall
INSIGHT: Five important regulatory aspects of the Silicon Valley Bank collapse: http://go-ri.tr.com/S5LTLf
OPINION: Scale of U.S. banks' unrealized losses, distressed borrowing and central bank actions point to wider problems: http://go-ri.tr.com/oyHrxD
U.S. lawmakers to hold first hearing on SVB, Signature Bank collapse: http://go-ri.tr.com/7AcwNS
Compliance Clarified is a podcast from Thomson Reuters Regulatory Intelligence.
Listen to wide-ranging, insightful discussions on all things compliance for financial services firms. We delve into the hot topics of the day, the challenges faced and offer up practical ideas for emerging good practice. We de-mystify regulation and explore the art, as well as the science, of the ever-expanding role of the compliance officer. Enforcements, digital transformation, regulatory change, governance, culture, conduct risk – anything and everything impacting the compliance function is up for discussion.