This morning, 13 March 2023, the Bank of England (BoE) updated its announcement regarding the status of Silicon Valley Bank UK Limited (SVBUK). We have been following the situation closely and answering questions from clients who have business with SVBUK. This FAQ is an update to the FAQ we published on Saturday, 11 March in relation to the then-developing situation.
To discuss any of the issues below, please get in touch with the authors or your usual Goodwin contact.
What is the status of Silicon Valley Bank UK Limited?
This morning (13 March 2023), the BoE announced that, in consultation with the Prudential Regulation Authority (PRA), HM Treasury (HMT) and the Financial Conduct Authority (FCA), it has taken the decision to sell SVBUK to HSBC UK Bank Plc (HSBC). The FCA made a similar announcement. SVBUK remains PRA authorised and FCA regulated. As at the current time, although owned by HSBC, SVBUK remains a separate legal entity. The BoE opted for a private sector purchase process under the Banking Act 2009 instead of the bank insolvency procedure announced on 10 March 2023 (which is addressed in our previous FAQ).
I am a customer of SVBUK. How does the BoE decision affect my rights?
As a customer of SVBUK, you will continue to have the same rights as you had prior to the announcement, including access to the Financial Ombudsman Service.
I have monies on deposit with SVBUK. Can I now withdraw them?
The FCA advised that SVBUK will now operate as normal, and the BoE and HMT have confirmed depositors’ money is safe as a result of the transaction. Our expectation is that you should now (or imminently) be able to access monies in your bank accounts as you ordinarily would.
As a pragmatic step, you may wish to be comfortable that you are able to operate your SVBUK accounts as usual before further payments are made into these accounts.
I took emergency action as a result of the SVBUK situation at the end of last week (or over the weekend). I am concerned that this was a breach of my agreements with SVBUK. Is there anything I should consider?
To protect their positions, customers of SVBUK may have taken emergency steps such as withdrawing monies from their accounts with SVBUK. Some of these actions may have resulted in technical breaches of agreements with SVBUK (for example, under loan or hedging arrangements).
Our team can advise you on your options, but you may wish to consider the grace periods (if any) available to you under the relevant documentation to remedy the relevant breaches. Moreover, you may wish to speak to your contacts at SVBUK to seek comfort that you will have continued access to your financing arrangements, and that any prudent actions taken to mitigate your situation over the last few days do not result in any continuing default.
I have a loan agreement with SVBUK. What is the status of my obligations to the bank?
Our team can advise you as to your rights and obligations under your contracts with SVBUK. If you have payment obligations to the bank (whether interest or other scheduled repayments), it is likely that you are now required to make these in the ordinary course. A prudent approach may be to speak with SVBUK directly to confirm how and when any such payments are to be made.
My agreement refers to “Silicon Valley Bank (UK Branch)” as the counterparty. Does this change your answers above?
No, it should not. The assets and liabilities, including the loans and deposits of Silicon Valley Bank (UK Branch), were transferred to SVBUK on 31 July 2022 under Part VII of the Financial Services and Markets Act 2000.
Simon ThomasPartnerFinancial Restructuring, European Offices
Ajay PathakPartnerCo-Chair, London Office