Will any more banks with over 500MM in assets fail in 2023?

SVB Crisis•Silicon Valley Bankruptcy (SVB)

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resolved Mar 13

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YES

ALL

Ie need the FDIC to step in and liquidate assets to cover depositors. Does not include SVB.

Context: Silicon Valley Bank was closed Friday morning by state regulators and put under the control of the FDIC, after a bank run and capital crisis.

https://www.cnn.com/2023/03/10/investing/svb-bank/index.html

https://www.fdic.gov/news/press-releases/2023/pr23016.html

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sold Ṁ23 of NO

Closing this market as it looks like it should resolve yes. Do any think otherwise?

sold Ṁ57 of NO

Signature Bank, with assets of >$100B, was closed by the FDIC today

https://www.wsj.com/articles/federal-reserve-rolls-out-emergency-measures-to-prevent-banking-crisis-ba4d7f98

predicted YES

@ChrisGillett First Republic coming soon...

sold Ṁ5 of NO

No paywall article https://www.cnbc.com/amp/2023/03/12/regulators-close-new-yorks-signature-bank-citing-systemic-risk.html

Globally? Or just banks based in the US?

predicted NO

@SG Good question, I intended this for US banks only

predicted YES

Frustrating that they don’t specify the exact range we want, but as a sense of scale:

“As of December 31, 2020, there were 315 institutions with total assets between $400 million and $500 million, and another 136 with assets between $850 million and $1 billion.”

https://www.claconnect.com/en/resources/articles/2018/what-to-expect-when-your-bank-reaches-either-$500-million-or-$1-billion?ssp=1&darkschemeovr=1&setlang=en-US&safesearch=moderate

So to bet NO: Are you sure SVB 99th percentile mismanaged?

I think there is likely at least one other who did similar things and will have a similar outcome.

predicted NO

@MatthewRitter https://www.bankingstrategist.com/community-banks-number-by-state-and-asset-size

predicted NO

@ian Looks like we've got around 1600 banks with over $500MM in assets.

predicted NO

@ian Oh, and less than $10B in assets so it's excluding some mega banks.

bought Ṁ100 of NO

Betting No.

There were 4 bank failures in 2020, and none involved assets much above $100M. I don't think the current situation is significantly worse than the 2020 recession.

https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/

Also, SVB was a regional bank with unique exposure.

The next most vulnerable bank with assets >$500M is First Republic Bank. 68% of their deposits are uninsured. There's a risk here, but I think it's under 45%.

bought Ṁ20 of YES

@ChrisGillett Wasn’t a core issue with Silicon Valley Bank rising interest rates, which are “worse” than 2020?

Although I share your principled understanding that it is neither 0% or 100%, I think it is more than 45% likely that Silicon Valley Bank is not the only one who mismanaged the risk of rates going higher than projected (https://www.realtor.com/research/2022-national-housing-forecast-midyear-update).

I agree the strongest argument against my position is that Silicon Valley Bank had a unique client profile. We’ll see!