After US Officials End Parent Firm, Bank of England Closes Silicon Valley Bank's UK Office

The Bank of England has closed Silicon Valley Bank (SVB), which was shut down by American authorities on Friday. The company will be subject to bank bankruptcy processes, the central bank stated.

BOE is forced to close its U.K. branch as a result of the SVB failure.

The U.S. Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection and Innovation (DFPI) have closed Silicon Valley Bank (SVB), the 16th-largest bank in the country. This is the result of ripple effect that has spread overseas to the company's U.K. subsidiary. SVB UK is no longer handling payments or taking donations as a result of the Bank of England's (BOE) intervention. According to the BOE statement, the bank will enter a bank bankruptcy process, and qualified savers will receive payouts from the FSCS up to the safe maximum of £85,000 or up to £170,000 for combined accounts.

Customers tried to extract $42 billion in savings via bank transfers after SVB failed, causing pandemonium. The company's U.K. affiliate has also been impacted by the bank's failure, according to Susannah Streeter, director of money and markets at Hargreaves Lansdown, who claimed that it was unavoidable that the SVB UK branch would fail. Despite claims to the contrary that the British company was ringfenced from its parent, the run on the U.S. bank scared away consumers who banked there. Deposit withdrawal efforts increased after U.S. authorities intervened to halt the mothership, placing the bank in a very vulnerable situation.

Silicon Valley Bank UK's restricted influence in the United Kingdom and absence of any vital roles sustaining the financial system were emphasized in the BOE statement. Liquidators will manage the bank's other assets and obligations, and they will disperse gains to debtors in this way.

In order to prevent additional financial collapses after SVB's fall, Streeter proposed that central bank rate increases might be more carefully analyzed. Officials will now be closely observing this development and may be more hesitant to raise interest rates in the future to avoid seriously damaging anything else.

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