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By Michael BLÜMKE, Lead Portfolio Manager at ETHENEA Independent Investors S.A
Against the backdrop of SVB's internal risk management (no duration hedging at all for a book with a huge duration mismatch), its unprecedented growth story and its very focused customer base, it very much points in the direction of an idiosyncratic event.
Of course, there was a risk that some other regional banks could face a similar risk, just because you can't rule out bank runs. This was never a risk for larger banks with more supervision and better capital ratios. However, the fact that the FDIC (Federal Deposit Insurance Corporation) took over SVB and made all deposits whole (although only amounts up to USD 250,000 are insured) is a strong sign from the...
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