"The KEY TAKEAWAY here is that SVB’s bank run was an IDIOSYNCRATIC event due to their highly unique client base — mostly institutional clients in the beleaguered Tech sector with accounts far >$250k FDIC insurance threshold."
Personally not familiar with the banking sector. Do majority of banks hedge their HTM portfolio and SVB was an exception or this is not common practice to begin with?
Hi Daniel, tbh I'm not 100% sure, but yes banks do hedge their interest rate sensitive portfolios with swaps as a common practice. SVB was very much an exception, as other Substack commentary has pointed out.
Personally not familiar with the banking sector. Do majority of banks hedge their HTM portfolio and SVB was an exception or this is not common practice to begin with?
Hi Daniel, tbh I'm not 100% sure, but yes banks do hedge their interest rate sensitive portfolios with swaps as a common practice. SVB was very much an exception, as other Substack commentary has pointed out.