UK intervenes in Silicon Valley bank branch to avoid global contagion

The earthquake it caused the collapse of Silicon Valley Bank (SVB) This is already being noticed in some countries. The first to make far-reaching decisions was the Bank of England, which yesterday decided to declare a subsidiary company insolvent. The decision came less than 24 hours after the crisis of the American parent company, which has already become the second largest financial collapse in the history of the United States since 2008. Not surprisingly, BLS managed assets of about 209 billion dollars. The epicenter of the earthquake was generated on Friday, after US financial regulators. announced the closure of SVB due to insolvency and decide to implement measures to guarantee the protection of all their insured deposits.

Now the Bank of England has taken over the Bank of England. His decision will enable entity clients to collect deposits up to the limit guaranteed by the authorities. So declaring insolvency will allow the Financial Services Compensation Scheme (FSCS) to come into play, which will be able to pay savers up to the maximum protected amount of £85,000 (€96,000) or £170,000 as soon as possible. in the case of joint accounts. The problem is that, as in the United States, the vast majority of buyers in the BLS (more than 96% in the US country) were corporate clients and therefore had accounts or deposits above that amount.

calm message

The British authorities issued a message of calm. Therefore, the Bank of England wanted to clarify that it is BLS —specializing in financing new technology companies—”has a limited presence in the UK and does not have a key function within the financial system.”

The statements of the Ministry of Economy moved in the same direction, which assured yesterday that it is in contact with its central bank to try to “minimize” the effect that bankruptcy can have on British soil. They also insisted that the situation in the American entity does not pose a threat to the country’s banking sector.