Olivier Douliery AFP Getty Images
The Bank of England said on Friday it was seeking a court order to place Silicon Valley Bank UK Limited into insolvency proceedings, after US regulators took over its parent company, SVB Financial Group, 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 company will stop making payments or accepting deposits,” the BoE said.
In the insolvency process for banks in Britain, some depositors are eligible for up to 85,000 pounds ($102,000) in compensation for lost deposits, or 170,000 pounds for joint accounts.
Other assets and liabilities will be managed by the bank’s liquidator and any funds recovered will be forwarded to creditors, the BoE said.
Bank failures are rare in the UK, with only two lenders going through the BoE’s resolution procedure since 2009.
Earlier on Friday, the Financial Times reported that SVB’s British arm had sought 1.8 billion in liquidity from the BoE through the discount window facility, which offers emergency funding to banks if they have sufficient collateral.
Silicon Valley Bank UK said earlier that it is an independent entity with a board of directors, ring-fenced from the parent company and other additions.
The US banking regulator took over parent SVB on Friday in a bid to protect depositors after the biggest bank failure since the financial crisis saw the global banking sector shed billions in market value.
The crash in SVB shares, which began on Thursday, has spread to other US and European banks. US banks have lost more than $ 100 billion in stock market value and European banks shed another $ 50 billion in value over the past two days, according to Reuters calculations.