The Bank of England has moved to put the UK branch of Silicon Valley Bank on settlement after it filed for £1.8 billion in liquidity as its parent company is fall on Friday, causing “panic” among UK startups and investors.
The BoE said in a late-night statement that it planned to use its bank insolvency procedure, which would allow depositors to be paid up to £85,000 as quickly as possible from the money insurance scheme. send. The liquidator will manage the remaining British assets and distribute them to creditors, including large depositors.
According to two people familiar with the matter, financial consulting firm Interpath has been placed on the list of insolvent administrators. Interpath declined to comment.
“SVB UK has a limited presence in the UK and no critical functions support the financial system,” the BoE said, after US regulators take over US parent company on Friday. It added that the company will stop making payments or taking deposits.
The decision to call time on SVB UK comes after the bank applied for the BoE’s discount window, which offers short-term funding to banks, for £1.8 billion on Friday.
SVB’s UK branch was not immediately available for comment. On Friday afternoon, SVB UK posted a statement on Twitter emphasizing that it was an “independent banking institution”.
“We appreciate that this is a worrying time for our customers, so we are working tirelessly to support them and provide more context,” said Erin Platts, director executive officer of SVB UK, said in a statement. The tweets have been removed.
Group messaging apps shared by UK venture capitalists have exploded on the Bank of England news and comments, especially as many of the apps have been picked up by executives operations at SVB reassured just hours earlier that the UK entity had been “besieged” from its US parent company.
British investors are worried about companies in their portfolios, some of which tried to cash out on Friday but were unsuccessful. Many fear that dozens of UK startups will go bankrupt if the government does not step in to save SVB.
Coadec, a lobbying group representing tech startups in the UK, said on Saturday that its members were “panic”.
Dom Hallas, chief executive of Coadec said: “We know that there are a large number of startups and investors in the ecosystem with significant exposure to SVB UK and would be concerned. “We have been working with the UK government, including the Treasury and Number 10 on the potential impact, and I know that work has been going on overnight on policy options.”
Create in 2012 as the first overseas branch of SVB, the UK branch became a subsidiary last August. It boasts a team of 700 people across Europe, the Middle East and Africa, according to a report. tweet from an official UK bank account at an awards ceremony last week.
In a statement published on its website, SVB UK said that following a “conversation” with the UK’s financial regulator, the Prudential Regulator, “has an intention, except for any any event of interference, putting Silicon Valley Bank UK Limited in insolvency from Sunday evening. We are determined to work on behalf of our clients.”
“We are working with the Bank of England to ensure that the failure of the UK Silicon Valley Bank is smoothly managed and any disruption is minimized,” the Treasury said.
Additional reporting by Michael O’Dwyer and Brooke Masters in New York and George Parker in London