fintech digest
Fasanara's Vision For The Future of Finance, Credit Suisse Deal, Bank Capital Structures & More
Research Team
23 March 2023
Fasanara research: The future of finance
See Fasanara Capital's recent report on The Future of Finance, and how we envision the upcoming collision and merging of the worlds of Fintech Lending and Digital Assets.
UBS got Credit Suisse for almost nothing
It is sometimes useful to think that the shareholders of a bank are not its owners; they are just renting it from its creditors. Schematically, a bank borrows a bunch of money from depositors and other creditors and uses the money to make loans and buy securities and do other risky investments. If the investments end up being worth more than the deposits, the shareholders keep what’s left. If the investments end up being worth less than the deposits then, uh, that’s bad. Then the shareholders don’t own the bank anymore, for one thing, but that’s really the least of your problems.
Everything you need to know about AT1s
Additional Tier 1 bonds (AT1s) are part of a family of bank capital securities known as contingent convertibles or ‘Cocos’. Convertible because they can be converted from bonds into equity (or written down entirely), and Contingent because that conversion only occurs if certain conditions are met, such as the issuing bank’s capital strength falling below a pre-determined trigger level.
Stripe raises more than $6.5bn at $50bn valuation in fall from 2021 peak
Stripe has raised more than $6.5bn at about half the valuation it carried two years ago, sealing one of the largest private stock sales in US history and indicating that tech start-ups may have to accept big discounts if they want new funds. The fresh cash to the payments processing company was provided by existing investors in the company including Peter Thiel’s Founders Fund, Josh Kushner’s Thrive Capital, and Andreessen Horowitz, and new backers including two Singaporean investors, state fund Temasek and sovereign wealth fund GIC. In a tough funding environment, it provides the San Francisco- and Dublin-based group with enough new capital to meet billions of dollars of tax liabilities associated with employees’ stock units, but also leaves it with a new valuation of $50bn — far below its peak of $95bn in 2021.
Here’s what on-chain data tells us about Crypto’s reaction to the demise of Silicon Valley Bank and its impact on USDC
This past week saw three mid-sized banks fail, prompting fears of a bigger, panic-induced bank run. While those fears remain, it appears that depositors at the three banks shuttered over the weekend — Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank — will be able to access their funds.
All three bank failures have significant implications for cryptocurrency. USDC issuer Circle had $3.3 billion deposited with Silicon Valley Bank, which represented roughly 8% of the dollars backing USDC. Concerns over those deposits prompted USDC to lose its peg over the weekend, and while the peg has since been regained, the incident raises questions about off-chain counterparty risk for stablecoin issuers and other crypto businesses.