The Bank of England has taken the UK branch of a Silicon Valley bank into resolution after it applied for £1.8 billion in liquidity as its parent company collapsed on Friday, sparking concern among British start-ups and investors. reported the Financial Times on Saturday.
The BoE said in a statement late on Friday that it planned to use its bank insolvency process which allows depositors to be paid up to £85,000 from the deposit insurance scheme as quickly as possible. Liquidators will manage the remaining British assets and distribute them to creditors, including large depositors.
The FT reported that financial advisory firm Interpath would be the likely administrator for insolvency, according to two people familiar with the matter. Interpath declined to comment.
“SVB UK has a limited presence in the UK and no significant functions supporting the financial system,” the BoE said, after US regulators took over the US parent company on Friday. It states that the firm will stop making payments or accepting deposits.
The call time decision on SVB UK was taken after the bank applied to the BoE’s discount window, which provides short-term funding to banks, for £1.8 billion on Friday.
Silicon Valley Bank SIVB of SVB Financial Group,
US Federal Deposit Insurance Corp became the first major bank since the global financial crisis in 2008 to be taken over by the sudden demise of the once-mighty lender to technology companies in its namesake sector.
Look: Silicon Valley Bank becomes the largest bank to be taken over by the FDIC since the 2008 financial crisis
There was no immediate comment from the UK unit of SVB.
Sharing groups by UK venture capitalists on messaging apps erupted over the news and the Bank of England comments, especially as many were reassured by SVB executives only hours earlier that the UK unit would separate from its US parent. was “Ringfenced”.
British investors are worried about their portfolio companies, some of whom tried unsuccessfully to pull out funds on Friday. Many fear that dozens of UK start-ups will go under if the government doesn’t step in to save SVB.
Formed in 2012 as SVB’s first overseas branch, the UK branch became a subsidiary last August.
In a statement published on its website, SVB UK said that following “discussions” with UK financial regulator the Prudential Regulation Authority, “barring the event of any intervention, Silicon Valley Bank UK Ltd intends to enter insolvency proceedings from Sunday evening”. We are determined to act on behalf of our clients.”
The UK Treasury said: “We are working with the Bank of England to ensure that the failure of Silicon Valley Bank UK is managed smoothly, and that any disruption is minimised.”
Credit: www.marketwatch.com /