Update: On Friday evening, the Bank of England declared it was starting insolvency proceedings for SVB UK.
The UK arm of Silicon Valley Bank (SVB UK) is “doing the best it can” to operate normally in the wake of the news that US regulators had closed down its parent bank in California, Erin Platts, CEO of SVB UK, said this afternoon.
“We are operating — I don't want to say as normal, there's nothing normal about the situation I can tell you that — but we're operating and doing the best that we can to continue to support you all,” she said on a Zoom call, organised by VC firm LocalGlobe.
“We are processing payments, we are opening accounts and we are funding loans.”
Platts emphasised that, since SVB UK has been a wholly owned subsidiary of SVB since August last year, its activities are not “commingled” with the US bank.
“It means that you are a third party, ringfenced, separate legal entity with your own capital, your own liquidity, your own profits, and your own third-party board of directors,” she said.
“The client relationships, the accounts, the liquidity, the deposits in our entity cannot move in and out without the directors and the board's sign off. There's no commingling of funds between the US entity and the UK entity.”
Fund transfer concerns
But despite Platts’s claims that the bank’s main systems were still operating, several members of the audience wrote in the Zoom chat that people had not been able to transfer funds out of the bank on Friday.
“Portfolio companies have requested a transfer out last night. What is the status of transfers? Some are saying it didn’t come through?” asked Seb Wallace from early-stage investor Triple Point.
“None of our portfolio companies who have withdrawn since mid-morning today have seen cash clear,” added another partner at an early-stage investor.
Platts said she needed to leave the Zoom to take another call before answering the audience questions, and added that she couldn't answer questions from businesses about accounts held in the US and said that communications about US accounts would come “from group”.
Platts added that she was working with regulators to try and maintain SVB UK’s service.
“I have personally as CEO of a regulated bank been working in partnership with the PRA (Prudential Regulation Authority) and the FCA (Financial Conduct Authority) to make sure that I'm taking care of our clients, our employees and our shareholders,” she said. “The last couple of days have been extremely challenging. It's been very difficult to hear the noise and see some of the reactions across the market.”
On Thursday morning the bank announced it was planning a share sale to prop up its cash reserves, which prompted its share price to plummet over the next 24 or so hours. In Europe, founders and investors alike were worried about its liquidity and started pulling their money from the bank amid confusion over how safe their deposits were from contagion in the US.
Earlier today, California regulators announced they were shutting the US bank down and taking on its accounts. But the status of the UK branch of the bank, which has a separate cash pot, is still uncertain.