The FDIC receiverships of Silicon Valley Bank and Signature Bank have caused certain early-stage companies to face potentially crippling near-term liquidity issues. These liquidity issues may result in a company becoming insolvent. Therefore, boards of directors of such companies need to consider their fiduciary duties as well as steps that can be taken to mitigate risks.
Fiduciary duties are typically owed to the company for the benefit of its owners.
This FAQ has been updated to take account of developments through March 15, 2023.
Silicon Valley Bank (SVB) was closed by its California state regulators on Friday, March 10, 2023, and the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver. As the market absorbed these developments, customers of SVB and other regional banks rushed to protect their deposits over the weekend, resulting in the closure of Signature Bank in New York, and the announcement on Sunday that all deposits at SVB and SB were moved to newly formed bridge banks.
What you need to know:
News of HSBC's acquisition of Silicon Valley Bank UK (SVB UK) has brought huge relief to the UK tech community and wider economy – quite possibly the optimal result in the circumstances following the Bank of England's announcement of a likely insolvency procedure on Friday 10 March.
US governmental authorities, including the US Department of the Treasury, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, took actions to provide both insured and uninsured depositors of Silicon Valley Bank (SVB) (as well as Signature Bank) access to their deposits beginning Monday, March 13. However, despite these actions, many customers are still dealing with the aftermath of an uncertain weekend, and practical questions remain to be answered.
This article provides information regarding what will now happen to the operations and business of the UK arm of Silicon Valley Bank (SVB UK) after the sale (the Sale) of SVB UK to HSBC’s ring-fenced UK subsidiary, HSBC UK Bank plc (HSBC).
After depositors rushed to withdraw funds from Silicon Valley Bank (SVB), on Friday, March 10, 2023, the US bank was closed by the California Department of Financial Protection and Innovation (DFPI), and the Federal Deposit Insurance Corporation (FDIC) was named receiver of the closed bank.
The Bank of England (BoE) has announced that Silicon Valley Bank UK Limited (SVB UK) will be sold to HSBC UK Bank Plc (HSBC). This is being carried out under the aegis of the Special Resolution Regime (SRR) — a bespoke pre-insolvency regime applicable to failing banks1 — set forth in the Banking Act 2009 (the Act).
Following the collapse of Silicon Valley Bank (SVB), there are many questions being asked across the financial and tech space: what caused the bank to collapse? Could it have been prevented? What could the bank itself and indeed its 40,000 customers - mostly in tech – done differently to mitigate risk and minimise impact.
Given SVB’s involvement in funding many fledgling tech start-ups and scale-ups, we look into what the Bank’s failure could have spelled for the viability of these businesses, and indeed the customers they supply into.
The collapse will have far reaching ramifications for many businesses and financial institutions across the UK
On Friday 10 March 2023 it was announced that the Bank of England intends to place Silicon Valley Bank UK Limited (SBV UK) into a Bank Insolvency Procedure following the collapse of its parent company, Silicon Valley Bank, in the US.