The Bank of England (BoE) has terminated operations at Silicon Valley Bank’s United Kingdom branch (SVB U.K.), citing a “limited presence” in the country and no “critical functions” supporting the financial system.
SVB U.K. will “stop making payments or accepting deposits,” according to a statement made by BoE on March 10; BoE plans to ask the court to put SVB U.K. into a “Bank Insolvency Procedure.”
According to the BoE, in the event of a bank insolvency, “eligible depositors” would be compensated by the Financial Services Compensation Scheme up to the “protected limit” of £85,000 ($102,288) or up to £170,000 ($204,577) for joint accounts as soon as possible.
It further stated that throughout its insolvency proceedings, the bank liquidators would oversee the existing SVB U.K. assets and liabilities, with any recovery “distributed” to its creditors.
On March 12, a number of venture capitalists (VCs) in the UK, including Index Ventures and Atomico, released a statement supporting SVB U.K. SVB U.K. was praised in the statement, which claimed that it is a “trusted” and “valued partner” who supports startups in the U.K. in a “pivotal” way.
SVB in Trouble
This comes after the California Department of Financial Protection and Innovation shut down SVB. A U.K. non profit organization called the Coalition for a Digital Economy claimed on March 11 that a “large number” of entrepreneurs and investors in the ecosystem have “significant exposure” to SVB U.K. and that this will cause them to be “very concerned.”
Recently, Circle, the company that created the USDC stablecoin, has stated that the Silicon Valley Bank, which is one of its banking partners, has $3.3 billion of its reserve in cash deposits (SVB). In addition, a March 11 Castle Hill study found that well-known blockchain venture capitalists hold assets worth over $6 billion at the long-gone bank.