Silicon Valley Bank, the US subsidiary of SVB Financial Group, (SVBUS) was closed by the California Department of Financial Protection & Innovation on Friday 10 March 2023, with the Federal Deposit Insurance Corporation (FDIC) appointed as receiver.
Alongside this, the Bank of England, in consultation with other UK financial regulators, took action over the weekend in relation to Silicon Valley Bank UK Limited (SVBUK). We are monitoring developments relating to SVBUS and SVBUK.
This article summaries the measures taken by government authorities in the US and the UK in relation to SVBUS and SVBUK as at the time of publication on 13 March 2023 and the implications for SVB customers.
Implications for Deposit Holders with SVBUK
The Bank of England issued a Statement earlier today announcing that it had taken the decision to sell SVBUK to HSBC UK Bank plc (HSBC).
The Bank of England stated that:
- all depositors’ money with SVBUK is safe and secured as a result of the sale of SVBUK to HSBC
- all services will continue to operate as normal and customers should not notice any changes
- customers of SVBUK can continue to contact SVBUK through their usual channels
- its action has been taken to stabilise SVBUK, ensuring the continuity of banking services, minimising disruption to the UK technology sector and supporting confidence in the financial system
Implications for Loan Account Holders with SVBUK
According to the Bank of England Statement, SVBUK’s business will continue to be operated normally by SVBUK under the new ownership of HSBC and customers should continue to contact SVBUK through normal channels / contact person(s). This points towards business as usual for corporates with SVBUK loans. The Bank of England Statement says that borrowers should make any loan repayments to SVBUK as normal.
Implications for Deposit Holders with SVBUS
In an Extraordinary Joint Statement on 12 March 2023, the US Department of the Treasury, Federal Reserve, and the FDIC announced measures to strengthen confidence in the US banking system following the closure of SVBUS.
The measures include approving actions to enable the FDIC to complete its resolution of SVBUS “in a manner that fully protects all depositors”. The Extraordinary Joint Statement goes on to say that “Depositors will have access to all of their money starting Monday, March 13.”
The US Federal Reserve Board further stated that these actions will “fully protect all depositors, both insured and uninsured”.
Suggested Actions
The position in the US remains fluid, although depositors with SVBUS should be “fully protected” based on the US regulators’ statements linked above.
In the UK, it is expected that HSBC’s acquisition of SVBUK provides a complete solution for SVBUK depositors and borrowers. Nonetheless, we recommend that SVB borrowers locate and review the terms of their current SVB loan / facility / security documentation. This is important to fully understand the rights and obligations of your company with respect to its banking arrangements with SVB.
If you are a customer of SVB and you have questions concerning the subject matter of this article, please contact Andrew McIntyre (Corporate) ([email protected]), Ronan Shanahan (Corporate) ([email protected]), David Maughan (Banking) ([email protected]), Craig Sowman (Corporate Restructuring and Insolvency) ([email protected]) or your normal William Fry contact for guidance on the legal issues arising from these developments or any matter related to the receivership of SVBUS and sale of SVBUK to HSBC.
Contributed by Gavin White, Toby Boyd.
