R&I Update - March 2023 – 1 / 4 观点
After a weekend that saw the tech ecosystem unite to fight for its future, on Monday 13 March 2023, the Bank of England (the Bank) effected the sale of Silicon Valley Bank UK Ltd (SVB UK) to HSBC. It used the resolution powers for stabilising failing banks granted by the Banking Act 2009 which were introduced following the 2008/9 financial crisis.
Just three days earlier, following the impact of the SVB receivership appointment in the US, the Bank had announced its intention to apply to put SVB UK into a bank insolvency procedure (a modified liquidation).
In the same statement it said that SVB UK had a limited presence in the UK and was not systemically important. But after intense lobbying by the tech industry, and the emergence of a credible purchaser over the course of the weekend, the Bank determined that the conditions for exercising its stabilisation powers were met (including the public interest test).
At 7:00 on Monday HSBC acquired the shares in SVB UK via the exercise of the Bank's resolution powers, without any further consents being required and without cost to the taxpayer.
All depositors' money held by SVB UK is now secure and SVB UK's business will continue to operate normally under the ownership of HSBC.
This was the optimal result – on a winding up, eligible depositors protected by the Financial Services Compensation Scheme would only receive a maximum of £85,000 (or £170,000 for joint accounts). Many businesses had significantly greater sums deposited with SVB UK and faced a liquidity crisis in the event of a bank insolvency procedure.
Whilst the sale has brought huge relief to the UK tech and venture capital community, the situation at SVB UK is a stark reminder to corporates of the risks of concentrating their deposits with one bank (albeit this formed part of SVB UK's operating model). They should also consider the terms of their financing documents in the event of lender failure.
For more information on this situation, watch our briefing webinar here.
Should you require any further support, please don't hesitate to get in touch with a member of our Restructuring and Insolvency team or email our taskforce.
作者 David Volek