Bank of America wins big from Silicon Valley bank collapse

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Startups and VCs scramble to get their money in safe hands after the collapse of Silicon Valley BankThey have become giants of Wall Street: Bank of America,

SVB imploded late last week after depositors tried to withdraw $42 billion from the institution, with the Federal Deposit Insurance Corporation (FDIC) taking over the bank over the weekend. Meanwhile, the New York Department of Financial Services seized signature bank on Sunday, saying that the corporation had “failed to provide reliable and consistent data, leading to a significant crisis of confidence in the bank’s leadership.”

But as the saying goes, out of chaos comes opportunity. The opportunity in this case seems to have fallen on Bank of America, which brought in more than $15 billion in deposits due to the collapse of SVB.

Sources familiar with the matter told Bloomberg that the scare came from customers moving their money to an institution — the second-largest bank in the States — that is considered (and is believed to be) too big to fail. by the Federal Reserve, In fact, business Latest Annual Report for 2022 Reveals that the company brought in $27.5 billion after tax and holds $3.05 trillion in assets.

big bank gift

Bank of America isn’t the only giant bank to see an influx of new business. as reported by financial Times, JP Morgan is helping its new clientele by reducing the waiting time for account opening. It is also speeding up the rate at which new customers can access the funds to ensure they can pay staff, a source on the matter confirmed this week.

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City Group There has also been a scramble to reportedly onboard customers with holdings in excess of $250,000 guaranteed by federal insurance, seeing a particular push from account holders at all major financial institutions – despite the government pledging they are still covered. Will go

A senior banker compared the calls coming in at the institution to a sunny day at Chicago’s O’Hare airport, as other sources confirmed staff were being reassigned from their roles to deal with the massive onslaught of inquiries. has been appointed.

Among those desperately trying to set up new accounts is billionaire Mark Cuban, who said on a twitter space over the weekend He’s scrambling to save his “baby” — the affordable platform — by clicking on the phones, setting up new accounts and “writing checks” for the business’s payroll.

Bank of America, Citigroup and JP Morgan did not immediately respond when contacted. Luck for comment.

Mystery portfolio buyer revealed

The reasons cited for the downfall of SVB are “from”stupid managementA run on the bank for losses from a bond portfolio sold to a mystery buyer on March 8.

According to reuters SVB was forced to recognize a loss of $1.8 billion on a $21 billion bond portfolio, which largely consisted of US Treasuries. The portfolio was yielding only 1.79%, well below the current 10-year Treasury yield of approximately 3.9%.

SVB has now confirmed this Goldman Sachs Was the buyer of the troubled portfolio. a spokesperson told reuters The transaction was carried out “at negotiated prices” and netted SVB $21.45 billion in proceeds.

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goldman sachs declined Luck’Request for comment.

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