Bank of England closes UK branch of Silicon Valley bank after US regulator shuts down parent company – Bitcoin News

After the US regulators shut down Silicon Valley Bank (SVB) on Friday, the Bank of England has closed the UK-based branch of the company. The central bank made it clear that it intended to keep the subsidiary company in bank insolvency procedures.

SVB failure prompts BoE to close UK branch

After the US Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection and Innovation (DFPI) shut down Silicon Valley Bank (SVB), the fallout from the 16th largest bank failure in the United States is starting to wear off. California’s DFPI clarified that the chaos at SVB began on Wednesday and as of Thursday, customers attempted to withdraw $42 billion in deposits via wire transfer.

SVB’s failure has now gone overseas and has affected the company’s UK subsidiary, prompting the Bank of England to step in and shut it down. On Saturday, the official Twitter page of SVB UK gone A combined statement of the different types of UK Venture Capital Funds supporting the UK branch.

The Bank of England (BoE) said the UK branch of Silicon Valley will stop processing payments and is no longer accepting deposits. “The Bank of England, in the absence of any meaningful information, intends to apply to the court to place Silicon Valley Bank UK Ltd in the bank insolvency process,” the BOE statement reads. “A bank insolvency process would mean that eligible depositors are paid by the FSCS as quickly as possible, up to the protected limit of £85,000, or £170,000 for joint accounts.”

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In a note sent to News, Susannah Streeter, head of wealth and markets at Hargreaves Lansdowne, said the SVB UK branch was bound to fail.

Streeter said, “It seemed inevitable that even a dramatic loss of confidence in SVB would drive its UK arm into bankruptcy.” “The US bank’s race spurred customers to bank with the British subsidiary, despite protests that surrounded it from its parent. Once US regulators stepped in to ground the mothership, deposits Withdrawal attempts escalated, putting the bank in a highly precarious position,” said a market analyst.

The BOE statement on Friday said the UK branch of Silicon Valley would see its other assets and liabilities handled by liquidators, and recoveries would be distributed to creditors in the same way. ,[Silicon Valley Bank U.K.] has a limited presence in the UK and no significant work supporting the financial system,” stressed the BOE statement. Analysts at Hargreaves Lansdown pointed out that the SVB collapse was more likely for the central bank to hike rates before other financial failures. may be examined carefully.

Streeter concluded, “It is clear that the rapid rise in rates has taken the sector by surprise and the Fed’s determination to raise rates has brought fresh concerns.” “Policy-makers will now be monitoring this turn of events very closely, and may now be more likely to tread carefully with further rate hikes, to make sure nothing else breaks down badly. “

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What do you think this event means for the future of banking stability both in the US and abroad? Share your thoughts in the comments section below.

jamie redman

Jamie Redman is news lead at News and a financial technology reporter based in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 6,000 articles for News about the disruptive protocols emerging today.

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