Silicon Valley Bank’s (SVB) United Kingdom (UK) branch has been ordered to halt its operations by the Bank of England (BoE) due to its “limited presence” and no “critical functions” supporting the financial system.
On the same day, the California Department of Financial Protection and Innovation ordered the closure of SVB in the United States. BoE has announced that it will apply to the court to place SVB UK into a “Bank Insolvency Procedure.”
BoE has stated that “eligible depositors” will be paid out by the Financial Services Compensation Scheme (FSCS) up to the protected limit of £85,000 (approximately $102,288 USD) or up to £170,000 (approximately $204,577 USD) for joint accounts “quickly” in the event of an insolvency procedure. However, it has not specified a timeline for the insolvency proceedings.
Several U.K. venture capitalists (VCs), including Index Ventures and Atomico, have issued a joint statement endorsing SVB UK. They have described it as a “trusted” and “valued partner” that plays a “pivotal” role in supporting startups in the U.K.
However, there are concerns about the impact of the SVB UK closure on the U.K. startup ecosystem. The Coalition for a Digital Economy has stated that a “large number” of startups and investors have “significant exposure” to SVB UK.
The Castle Hill report reveals that prominent blockchain VCs have over $6 billion worth of assets held by the now-defunct financial entity. SVB UK has not issued any statements in response to the BoE’s order.
