The United Kindom's central bank has halted the operations of Silicon Valley Bank’s UK arm, stating that it has a “limited presence” and no “critical functions” supporting the financial system.
The Bank of England (BoE) made the statement on Mar. 10, declaring that SVB U.K. will “stop making payments or accepting deposits,” as BoE intends to apply to the court to place SVB U.K. into a “Bank Insolvency Procedure.”
The announcement follows the closure of SVB by the California Department of Financial Protection and Innovation in the United States.
Statement on Silicon Valley Bankhttps://t.co/2FFxuzfziR— Bank of England (@bankofengland) March 13, 2023
The BoE explained that a bank insolvency procedure would mean that “eligible depositors” are paid out by the Financial Services Compensation Scheme up to the “protected limit” of £85,000 (approximately $102,288) or up to £170,000 (approximately $204,577) for joint accounts, as “quickly” as possible.
It added that the bank liquidators would manage the remaining SVB U.K. assets and liabilities during its insolvency proceedings, with any recoveries “distributed” to its creditors.
Several U.K. venture capital firms, including Index Ventures and Atomico, issued a joint statement on Mar. 12 endorsing SVB U.K. The statement expressed support for SVB U.K., stating that it is a “trusted” and “valued partner” that plays a “pivotal” role in supporting startups in the U.K.
The Coalition for a Digital Economy, a U.K. nonprofit that campaigns for policies to support digital startups, also shared concerns over the closure, stating on Mar. 11 that there are a “large number” of startups and investors in the ecosystem who have “significant exposure” to SVB U.K., adding that they will be “very concerned.”
Meanwhile, a Mar. 11 Castle Hill report revealed that prominent blockchain VCs have over $6 billion in assets at the now-defunct bank in the United States.
These include $2.85 billion from Andreessen Horowitz, $1.72 billion from Paradigm and $560 million from Pantera Capital.