One of the biggest banks in the world failed to account for a capital management risk scenario where interest rates go up? Insane

Practically every single bond - which banks effectively have to buy and hold for regulatory reasons - has reduced in mark-to-market value every single day the last 2 years.

Personally I think they are nuts for having (reportedly) such a long average duration of bonds in their portfolio, but they were also paying a pretty decent interest rate on savings to their customers - that money has to come from somewhere.

Silicon Valley Bank was nowhere near one of the biggest banks in the world.

https://en.wikipedia.org/wiki/List_of_largest_banks

Not even amongst the largest banks in the US:

https://en.wikipedia.org/wiki/List_of_largest_banks_in_the_U...

They're #18 on the US list you linked, I saw other articles saying they were #16 so it probably just depends on the date assets were measured.

The falloff is extremely rapid. They're closer in both an absolute and relative sense to the 40th than even the 10th.

Looks I said high when I meant low. For people who aren't in finance, if rates go up, bond prices go down: an instrument that pays 10% a year on 100 is worth less when there are new instruments paying 15% a year on 100. For the rates to match the original 100 is now lower, because that's the only way you get the same amount of interest per dollar spent buying the bond.