For normal banks, higher interests means more profits. Why is SVB Bank the opposite?
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$\begingroup$ This thread may interest you twitter.com/FabiusMercurius/status/1634227592227336195 In essence: due to unusual circumstances SVB was forced to sell Bonds it owned at a loss. (When i.r. rise the mrket price of Bonds goes down). $\endgroup$– nbbo2Mar 11 at 7:45
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1$\begingroup$ Other Banks may also hold "underwater Bonds", but as long as they don't have to sell them, they should be alright twitter.com/Brad_Setser/status/1634308556261412864 Still, it is a bit concerning, isn't it ? What other big bondholders could get in trouble? $\endgroup$– nbbo2Mar 11 at 8:27
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1$\begingroup$ @nbbo2 I'm not opposed to closing the question as inappropriate, but "too basic" is rather hard to accept. There are significant risk management issues involving interest rate exposure and correlations between SVB's asset values and funding liquidity. This isn't "basic." $\endgroup$– Matthew GunnMar 11 at 15:18
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1$\begingroup$ OK, I agree. SVB may well become a Case Study for advanced Management of Financial Institutions courses in the future. (The more I read about it the more complex it seems). I will delete my comment. You can vote to re-open if you want. $\endgroup$– nbbo2Mar 12 at 6:59
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1$\begingroup$ A good WSJ article: wsj.com/amp/articles/… $\endgroup$– Dimitri VulisMar 12 at 13:25
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