How crazy was Silicon Valley Bank’s zero-hedge strategy?

> Well it looks that weakening profitability in 2022 as the tech world made SVB do something really dumb. In the first quarter, it unwound $5bn of AFS hedges to book a $204mn gain, and in the second quarter it dumped another $6bn of hedges to lock in a $313mn gain.

I am not a business person, but "making the quarter look good at long term expense" seems to be where bad things happen, almost like it totally breaks the incentive system.

> Because of rising rates the actual market value of the HTM portfolio was about $76bn at the end of 2022, according to someone who has seen the details of the portfolio and shared them with FTAV — an unrealised loss of $15.1bn.

No need to cite someone, it's literally spelled out in the 10-K. Ctrl-F unrealized losses, see the HTM section. Says 15bn right there. This isn't even hidden.

Not sure if the rest of the article is gonna be worth reading....

Really good article, and this made me laugh

"Essentially, to juice its P&L in the short term, SVB ambled into 2023 almost completely unhedged".