The Bank of England (BoE), the UK’s central bank, has suspended operations at Silicon Valley Bank’s UK branch (SVB UK) due to the bank’s “limited presence” in the UK and the lack of “critical functions”. to support the financial system. It is the next chapter in the drama for the American bank that does not bode well for the crypto sector either.
Insolvency proceedings announced
On March 10, the BoE announced that SVB UK will “stop making payments or taking deposits”. BoE plans to file for bank insolvency proceedings for SVB UK. This comes after it California Department of Financial Protection and Innovation ordered the same day that Silicon Valley Bank (SVB) in the United States should close.
BoE explains that bank insolvency proceedings mean “qualifying depositors” are paid out as soon as possible 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.
She stressed that the bank liquidators would have the responsibility of managing the remaining assets and liabilities of SVB UK during the insolvency proceedings, with any proceeds being “distributed” to creditors.
Worry about startups
On March 12, several UK venture capitalists, including Index Ventures and Atomico, issued a joint statement in support of SVB UK. The statement praised SVB UK as a “trusted” and “valued partner” who plays a “critical” role in supporting UK start-ups.
On March 11 express the Coalition for a Digital Economy, a UK-based non-profit that advocates for policies to support digital startups, expressed concerns about the “significant exposure” of a “large number” of startups and investors in the ecosystem to SVB UK.
In addition, a report from Castle Hill on the same day revealed that prominent venture capitalists in the blockchain sector have committed more than $6 billion in assets to the now-bankrupt financial entity, with Andreessen Horowitz (a16z) contributing $2.85 billion, Paradigm $1.72 billion and Pantera Capital holds $560 million.