Bank of England seeks to liquidate UK arm of Silicon Valley Bank

The Bank of England said on Friday it was seeking a court order to place Silicon Valley Bank UK Limited in insolvency proceedings, after US regulators took over its parent company, SVB Financial Group, earlier in the day .

“SVB UK has a limited presence in the UK and no critical financial system support functions. In the meantime, the company will stop making payments or taking deposits,” the BoE said.

Under insolvency proceedings for banks in Britain, some depositors are entitled to up to 85,000 pounds ($102,000) in compensation for lost deposits, or 170,000 pounds for joint accounts .

Other assets and liabilities would be managed by the bank’s liquidators and any recovered funds would be passed on to creditors, the BoE said.

Bank failures are rare in Britain, with only two lenders going through BoE resolution procedures since 2009.

Earlier on Friday, the Financial Times reported that the UK branch of SVB had requested £1.8bn of liquidity from the BoE through its discount window, which offers emergency funding to banks if they have adequate collateral. .

Silicon Valley Bank UK said earlier on Friday it was a stand-alone entity with an independent board, separate from the parent company and other subsidiaries.

U.S. banking regulators took over parent company SVB earlier on Friday in a bid to protect depositors after the biggest bank failure since the financial crisis that prompted the global banking sector to lose billions in market value.

The rout in SVB shares, which began on Thursday, has spread to other U.S. and European banks. US banks have lost more than $100 billion in market value and European banks have lost another $50 billion in the past two days, according to a Reuters calculation.