Bank of England intends to liquidate Silicon Valley Bank

Bank of England intends to liquidate Silicon Valley Bank’s UK subsidiary

Web Desk

11th Mar, 2023. 03:41 pm
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Bank failures are uncommon in the United Kingdom.
Certain depositors in the United Kingdom are eligible for up to 85,000 pounds.
The parent SVB was taken over by US banking regulators earlier on Friday.

The Bank of England announced on Friday that it was seeking a court order to put Silicon Valley Bank UK Limited into insolvency, following the takeover of its parent firm, SVB Financial Group (SIVB.O), by US regulators earlier in the day.

“SVB UK has a limited presence in the UK and no critical functions supporting the financial system. In the interim, the firm will stop making payments or accepting deposits,” the BoE said.

Certain depositors in the United Kingdom are eligible for up to 85,000 pounds ($102,000) in compensation for lost deposits through insolvency proceedings for banks or 170,000 pounds for joint accounts.

Failures are uncommon

Other assets and liabilities would be managed by the bank’s liquidators, and any monies recovered would be distributed to creditors, according to the Bank of England.

Bank failures are uncommon in the United Kingdom, with only two institutions having gone through the BoE’s resolution procedures since 2009.

SVB’s British subsidiary had requested 1.8 billion pounds of liquidity from the Bank of England through its discount window facility, which provides emergency lending to banks with acceptable collateral.

Earlier on Friday, Silicon Valley Bank UK said that it was a separate organization with an independent board of directors, apart from the parent company and its subsidiaries.

The parent SVB was taken over by US banking regulators earlier on Friday in an effort to protect depositors after the greatest bank failure since the financial crisis caused the global banking sector to lose billions in market value.

The SVB stock crash, which began on Thursday, has spread to other US and European banks. US banks have lost more than $100 billion in stock market value in the last two days, while European banks have lost another $50 billion.