I, in common with most I suspect, had never heard of this bank before its collapse despite the fact they have a presence in the UK. It appears that the UK subsidiary is heavily involved in both tech and life sciences. Currently the government is looking into providing an emergency fund for affected businesses and considering a bailout or buyout by one of our large banks.
”The Bank of England subsequently ordered its UK subsidiary into insolvency on Friday night, putting firms at risk of losing almost all their cash. Only £85,000 of clients’ deposits will be protected by the Financial Services Compensation Scheme, or £170,000 for joint accounts, meaning many of SVB UK’s 3,500 customers will be facing major losses without government intervention.” The Guardian 12 March 2023.
As UK/EU deposits appear unaffected by the collapse of SVB it seems likely that Etsy Ireland and UK uses another bank to process transactions outside the US. I hope so, because otherwise they would be exposed to the loss of one bank on two fronts.
What surprises me is that SVB appears to have a clause which states that if the bank collapses UK deposits are at the bottom of the list for repayment in the event of asset liquidation, behind the uninsured deposits in the US. This would leave UK depositors with only the £85,000 (approx $105,000) guaranteed by the Financial Services Compensation Scheme.
I don’t understand the nuances of this (any legal financial professionals here with time on their hands??), whether that clause in SVB’s info could be overridden by a buyout of the UK arm, but if it is as stated then that could be very damaging and some firms may not recover.
If it is enforceable then I would hope that all businesses look closely at the fine print of whatever financial institution they bank with, particularly if it is a subsidiary of a foreign-owned one, and take whatever action is necessary to lessen their exposure to uninsured losses. The world banks globally now, a problem anywhere is a problem everywhere.
“Financial Services Compensation Scheme; Depositor Preference
It is important to note that if SVB were to go into liquidation, deposits maintained in the UK Branch would not have the benefit of deposit insurance of the US Federal Deposit Insurance Corporation. In addition, UK Branch deposits would not have the same preferred status over non-deposit creditors as do deposits payable in the US. This means that depositors of the UK Branch would receive payment from the liquidated SVB assets only after all uninsured US deposits were fully paid. In that case, You would be an unsecured creditor of SVB and would be repaid only to the extent that assets remain available after repaying all other secured creditors. SVB is covered by the UK Financial Services Compensation Scheme (FSCS). The FSCS can pay compensation to depositors if SVB is unable to meet its financial obligations. Most individual and small business depositors are covered by the FSCS.
In respect of deposits, an eligible depositor is entitled to claim up to £85,000.”
SVB Family Online
