The 2022-23 Economic Crisis Megathread

[crazy canuck]

Obviously one of the big'uns moved from Canada to the UK.

You are referencing HSBC I assume?  Not really a major player in Canada nationally - more of a regional player here.

And fyi, the Canadian operations are up for sale.

[Jacob]

Obviously one of the big'uns moved from Canada to the UK.

You are referencing HSBC I assume?  Not really a major player in Canada nationally - more of a regional player here.

And fyi, the Canadian operations are up for sale.

It was purely a math based observation - we're allegedly short one and the UK is allegedly up one. So obviously....

[Sheilbh]

HSBC are, incidentally, the bank that ended up buying the UK subsidiary of SVB. No bailout or government money at all - but a waiver (not sure how temporary) on allowing complex corporate depositors to sit within the ring-fenced bank.

Looking at the Canadian ones - did not have Nova Scotia down as a big financial hub

[HVC]

Headquartered in Toronto, they all are

Gf exaggerated but the top two are double the bottom two in assets, but they're still close to trillion dollar banks so not tiny.

[crazy canuck]

Obviously one of the big'uns moved from Canada to the UK.

You are referencing HSBC I assume?  Not really a major player in Canada nationally - more of a regional player here.

And fyi, the Canadian operations are up for sale.

It was purely a math based observation - we're allegedly short one and the UK is allegedly up one. So obviously....

Ah, ok - but GF was wrong, we definitely have a big 5 - and some would say a big 6 (the National Bank of Canada, who are likely to be the successful bidder on the HSBC Canadian operations).

[crazy canuck]

HSBC are, incidentally, the bank that ended up buying the UK subsidiary of SVB. No bailout or government money at all - but a waiver (not sure how temporary) on allowing complex corporate depositors to sit within the ring-fenced bank.

Looking at the Canadian ones - did not have Nova Scotia down as a big financial hub

Yeah, its a confusing name, but the name is just an historical oddity related to the original bank charter.  They are not operated out of Nova Scotia.

[Grey Fox]

I am not wrong. I am making a dig at the CIBC and BMO.

[The Minsky Moment]

But I'm a little disconcerted by the fact that regulators seem to be a bit suprised/caught on the hop when this happens. It feels like with rates rising for the first time in about 15 years that should be a risk that regulators are very interested in and monitoring really tightly. I'm not sure about the Fed rate - but for the BofE I think it's been 10 rises in a row with clear expectation setting. I think the markets have been adjusting to that - I'm a little concerned that maybe the regulators (here that means another bit of the BofE) haven't?

The regulators probably figured the rate movements wouldn't be an issue for institutions - like SVB - that hold the bulk of their long-term investments as hold to maturity (HTM) and thus were not required to mark them to market values. What they missed is the human dynamic of "viral" panic when you have a bank whose deposit base consists almost entirely of deposit amounts far above the FDIC insured limit.

To my mind, the bigger question is not how to make these kinds of institutions safer but why they exist at all in the 21st century.  But that is a different story.

[Tamas]

Yeah my impression is something fishy was going on with SVB, although it could be just utter incompetence.

I don't like how strongly wall street types lean on it though to overdramatise the situation. I think they smell blood, expecting the Fed to get scared and start dropping rates.

Which may happen of course. I fear the popping of the asset bubble is about to be delayed a few years.

[Admiral Yi]

Making depositors who had balances above the FDIC insured limit whole is the kind of bail out I object to.

Joan, what can you tell me about these large deposit holders? 

[HVC]

also, is the limit per person or per bank? Could I have my money in 10 banks and have 10 times the insurance?

[Sheilbh]

also, is the limit per person or per bank? Could I have my money in 10 banks and have 10 times the insurance?

In the UK deposit insurance is per pereson - same with tax relief on savings or pension contributions.

Although this is slightly different because it's corporate depositors (often using relatively complex products).

[HVC]

Thanks sheilbh, I guess that makes sense.

[garbon]

also, is the limit per person or per bank? Could I have my money in 10 banks and have 10 times the insurance?

In the UK deposit insurance is per pereson - same with tax relief on savings or pension contributions.

Although this is slightly different because it's corporate depositors (often using relatively complex products).

Isn't it per person per financial bank?

[Sheilbh]

Isn't it per person per financial bank?

I don't think so - but I'm just going off what I remeber being told when I was opening a savings account. I wasn't paying much attention because it's very much not a problem for me