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Banking on banks
The GC Minute. An independent tech, business and critical city insights news source.
It’s Thursday again already
Today’s newsletter is 1007 words: 4-minute read
In today’s email:
Big Banks: They’re falling, and Aussie companies are impacted
Hack Attack: In Australia…..today…. again…
Trending: Chamber of Commerce President versus Gold Coast Mayor
Around the Web: In r/GoldCoast this week
Weekend weather (hot)
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One Big Thing
Silicon Valley Bank Collapses (Not GC, but it matters)
The biggest bank failure in history was in 2008 when Washington Mutual lost $17 billion in 10 days.
Silicon Valley Bank just lost $42 billion in one day……………
What the Actual?
Basically, a typical bank run. This occurred last Friday when numerous customers withdrew their deposits simultaneously due to concerns about the bank's financial stability.
SVB's troubles stemmed not from bad loans but from investing in ultra-safe government-backed mortgage securities in 2021.
When the Fed raised rates in 2022, these securities lost value, creating a gap in SVB's balance sheet. As customers withdrew funds en masse, regulators were forced to shut the bank down.
The Wider Implications
It has had far-reaching consequences beyond the tech sector, impacting affordable housing, wineries, and even businesses in Australia.
Initially thought to affect only the ultra-wealthy in tech in America, SVB's collapse soon revealed more extensive implications across various industries and countries.
Industries On Guard
Two San Francisco affordable housing projects faced uncertainty due to the bank's failure, and wineries in California struggled to pay bills or process credit card payments in the aftermath of the collapse.
Government Guarantees Deposits
Over the weekend, the American federal government guaranteed deposits for SVB and Signature Bank customers, with President Biden stating that taxpayers would not bear any losses.
Why does US news matter on the Gold Coast??
It doesn’t, but it does..
ASX-listed companies with exposure to SVB include:
Nitro - Their offices are in San Francisco, Dublin, and Melbourne.
Xero - Their offices are in Melbourne, Sydney, and Adelaide.
Dug - Their offices are in Perth, Houston, and Kuala Lumpur.
SiteMinder - Their offices are in Sydney, London, Bangkok, Dallas, and Galway.
Redbubble - Their offices are in Melbourne, San Francisco, and Berlin.
Freelancer - Their headquarters are in Sydney.
Whispir - Their offices are in Melbourne, Sydney, Singapore, Auckland, and other locations.
Other ASX-listed companies include EBR Systems, buy now pay later provider LayBuy Group, Straker Translations and Nightingale Intelligent Systems are among the affected deposit holders.
Exposure is minimal; nevertheless, they are exposed, and locals here on the Gold Coast invest in the ASX and abroad.
CANVA - a unicorn company, is also exposed but is a privately held company.
What if it gets bad here?
The Technology Council of Australia says it stands ready to assist hard-hit firms.
Is Credit Suisse next in line?
Credit Suisse is looking very shaky. This is America’s 7th largest bank.
Are ya kidding?
Credit Suisse racked up $8 billion in net losses in 2022
Its wealth management unit also posted roughly $133 billion in net asset outflows for 2022
Scandals in recent years, including money laundering charges and other issues
In just 24 hours
It has sparked a fresh banking selloff in the last 24 hours, sending US stocks on a rollercoaster ride.
With its largest investor refusing to provide more financing, the Swiss banking giant's US-listed shares hit a record low.
A rout was ignited in European lenders, pressuring US banks raises concerns about Credit Suisse's financial stability.
Hack Attack (again)
Latitude Financial's 300,000 customers hacked
So, what’s going on?
Hackers have stolen the personal data of over 300,000 Latitude Financial customers, including driver's licenses.
Latitude Financial, a non-bank lender, provides buy now, pay later (BNPL) schemes for major Australian retailers such as Harvey Norman, JB Hi-Fi, David Jones, and The Good Guys.
People are angry because
The stolen information includes 103,000 identity documents (97% driver's licenses) from one provider and 225,000 customer records from another.
Consequences of the breach
UNSW cybersecurity expert Richard Buckland warns that the breach is "very concerning" as hackers may use the stolen data to impersonate customers and take out loans in their names.
Latitude has 2.8 million current customers, but it is unclear if the breach affects only current or also former customers.
What’s Albo say?
But, Cyber Security and Home Affairs Minister Clare O'Neil says Latitude is cooperating with the Australian Cyber Security Centre (ACSC) and regulators to minimize damage.
Latitude is working with the ACSC and law enforcement agencies as they investigate the cyberattack.
The Department of Home Affairs is coordinating support for anyone whose data has been exposed.
The bigger picture
Latitude Financial is the latest high-profile Australian company targeted by hackers, following recent cyberattacks on Medibank and Optus.
The federal government has announced plans to overhaul a $1.7 billion cybersecurity strategy and establish a national cyber office led by a new cybersecurity coordinator under the Home Affairs Department.
In our sun-soaked city of the Gold Coast, a verbal joust has erupted between Chamber of Commerce boss Martin Hall and Mayor Tom Tate.
What’s the beef?
The rift began over the future of Surfers Paradise and the role of businesses in its development.
Mayor Tate fired the first shot, accusing the Gold Coast Central Chamber of Commerce of "catching laryngitis" due to their lack of advocacy for the area.
There’s more to the story, of course. Chamber of Commerce president Martin Hall, wrote in a recent Bulletin that they continue to invite the mayor to attend and partake in Chamber events in work attempt to work together; however, the invitations continually go unanswered.
It seems the surfers aren’t the only thing getting cooked on the Gold..
Around The Web
The top Reddit comment for the week on the Gold Coast refers to another issue involving Mayor Tate, with questions raised about one of his land deals. Check it out below.
Seems you win the week atomicvon.
But let's not get bogged down in the details. Instead, let's revel in the banter between two city leaders as they navigate the complex landscape of politics, business, and the ongoing transformation of Surfers Paradise.
As they say, all's fair in love and war (of words). So let's hope that this clash of titans eventually leads to a positive collaboration for the greater good of the Gold Coast.
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