Silicon Valley Bank crisis: Group's UK unit set to be declared insolvent
2 min read . Updated: 11 Mar 2023, 10:39 PM IST
PremiumThe Bank of England said that eligible depositors would be paid by the UK’s deposit-insurance fund.
Days after the collapse of Silicon Valley Bank, the financial group's UK arm is set to be declared insolvent. The Bank of England said that eligible depositors would be paid by the UK’s deposit-insurance fund. According to an official statement, the UK's finance minister has spoken to the governor of the Bank of England about the situation.
“SVB UK has a limited presence in the UK and no critical functions supporting the financial system. In the interim, the firm will stop making payments or accepting deposits," a Reuters report quoted the central bank as saying.
According to the BOE statement, deposits are insured up to £85,000 ($102,000) or £170,000 for joint accounts.
While no appointments has been made yet, the company has reportedly lined up Interpath Advisory to handle the insolvency.
According to the Finance Ministry, talks are currently underway with affected firms. The junior finance minister will also discuss the concerns of some affected tech firms with industry representatives later on Saturday.
"The government recognises that tech sector companies are often not cashflow positive as they grow, and that they rely on cash on deposits to cover their day to day costs," an official statement said.
Earlier this week, US banking giant Silicon Valley imploded as patrons rushed to withdraw their deposits amid growing concern about the lender's health. The frenetic two-day run has sent shockwaves rippling across the globe and wiped out more than $100 billion in market value for US banks.
Its downfall is the largest failure of a financial institution since Washington Mutual collapsed at the height of the financial crisis more than a decade ago. The aftereffects are already being felt, with some startups scrambling to pay their workers and meet office expenses. This in turn could lead to furloughs or layoffs.