Bank of England Closes UK Arm of Silicon Valley Bank
- The UK venture of Silicon Valley Bank (SVB) has been closed by the Bank of England (BoE), as per a statement earlier this week.
- BoE said that SVB has had a “limited presence” in the UK and no “critical functions” supporting the financial system.
- SVB UK will stop making payments or accepting deposits, and the UK venture arm will be placed under a Bank Insolvency Procedure.
- USDC issuer Circle had an exposure of around $3.3 billion to SVB and attempted to withdraw $3.3 billion of its $40 billion in reserves.
The fall of the Silicon Valley Bank (SVB) is being termed one of the biggest financial disasters since the 2008 economic collapse and has led to a widespread panic in the crypto community as well. SVB has been closed by the California Department of Financial Protection. Interestingly, the UK arm of the commercial bank headquartered in Santa Clara has also been shut down by the Bank of England.
According to an announcement, the Bank of England (BoE) has closed the UK venture arm of the bank, SVB UK, while adding that the Silicon Valley Bank has a “limited presence” in the United Kingdom (UK) and no “critical functions” supporting the financial system. The statement from BoE came earlier this week, when the troubles at SVB had just begun.
Furthermore, it was revealed that the Silicon Valley Bank UK will stop making payments or accepting deposits, and the UK venture arm will be placed under a Bank Insolvency Procedure. This would mean that the “eligible depositors are paid out by the FSCS as quickly as possible up to the protected limit of £85,000 or up to £170,000 for joint accounts.”
FSCS, or the Financial Services Compensation Scheme, is a deposit insurance and investor compensation scheme for customers of authorized financial services firms. This practically confirms that FSCS can pay compensation in the event that a firm is incapable of doing so.
“SVBUK 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,” said the Bank of England in the statement.
As reported earlier by Bitnation, the Federal Deposit Insurance Corporation (FDIC) has taken over the Silicon Valley Bank as the receiver and also created the Deposit Insurance National Bank of Santa Clara (DINB). All the assets that the FDIC received after taking over were transferred to the DINB, and the agency confirmed that “all insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023.”
On the other hand, “uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds.” The FDIC also added in its press release that “as of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits.”
Interestingly, some of the largest companies in the crypto space had exposure to Silicon Valley Bank, including Circle, the company behind the second-largest stablecoin in the crypto space, USDC. Shortly after SVB confirmed its closure, USDC lost its peg to the US dollar, and crypto users called for a swift response from the government to prevent further damage from the situation.
Circle had an exposure of around $3.3 billion to Silicon Valley Bank and attempted to withdraw $3.3 billion of its $40 billion reserve from SVB on Thursday, March 9. However, the wire transfer was declined due to an incomplete transfer process.