After US Officials Close Main Firm, Bank Of England Closes Silicon Valley Bank UK Branch

Silicon Valley Bank (SVB), which was shut down by American officials on Friday, has been closed by the Bank of England. According to the central bank, the business will be subject to bank insolvency procedures.

The SVB debacle compels BOE to shut down its U.K. subsidiary.

The 16th-largest bank in the nation, Silicon Valley Bank (SVB), has been shut down by the California Department of Financial Protection and Innovation (DFPI) and the Federal Deposit Insurance Corporation of the United States (FDIC). This is the outcome of a domino effect that reached the company's U.K. affiliate from abroad. Due to the Bank of England's (BOE) action, SVB UK is no longer accepting money or contributions. The bank will file for insolvency, and eligible depositors will receive payments from the FSCS up to the secure limit of £85,000 or up to £170,000 for joint accounts, according to the BOE statement.

After SVB collapsed, customers attempted to withdraw $42 billion in funds through bank transactions, resulting in chaos. According to Susannah Streeter, head of money and markets at Hargreaves Lansdown, the collapse of the SVB UK division was inevitable and has had an effect on the company's U.K. partner as well. The U.S. bank's move frightened away customers despite assurances to the contrary that the British business was segregated from its parent. After U.S. officials moved to stop the mothership, deposit extraction attempts grew, leaving the bank in a very precarious position.

The BOE statement stressed Silicon Valley Bank UK's limited impact in the United Kingdom and lack of any significant responsibilities supporting the financial system. Liquidators will oversee the bank's other assets and debts, and they will use this method to distribute profits to creditors.

After the failure of SVB, Streeter suggested that central bank rate rises might be more thoroughly scrutinized in order to avoid further financial disasters. In order to avoid severely harming anything else, officials will now be carefully monitoring this development and may be less willing to increase interest rates in the future.

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