3 ms·

Did this require negotiation with SVB HQ leadership or the FDIC or are these national subsidiaries wholly independent and can do this on their own (i.e. is ther

by AdamN 4y ago

Did this require negotiation with SVB HQ leadership or the FDIC or are these national subsidiaries wholly independent and can do this on their own (i.e. is there a CEO of SVB UK and a board that has these rights?)

gnfargbl 4y ago
I think the relevant issue is that the national regulators are independent. SVBUK was (is!) regulated by the UK FCA, so on insolvency the FCA is the regulator in charge of resolving issues.
lucozade 4y ago
There doesn't have to be a CEO but there will be a UK legal entity, subject to UK regulation (presumably the PRA) and with its own board.
- AdamN 4y ago
  Ok I think I get it now. The UK regulator seized the bank and the accounts and sold both to HSBC. The US regulator just seized the accounts, which have now been backstopped fully, and the SVB bank itself is just operating for a while longer as they find a buyer for the carcass?
  - justincormack 4y ago
    No SVB has been shut down too. SVB UK is an independent company as of fairly recently. Banks have different regulatory environments than normal companies and no control if things go wrong.
    - AdamN 4y ago
      SVB still has employees that are apparently going to continue to get paid for a number of weeks (years for the ktlo people probably). The creation of a separate entity for all the assets makes me think that they've separated the two and that SVB itself isn't shut down just yet (although clearly it's a carcass as I said before with a value near zero).
samwillis 4y ago
> BoE used special resolution powers to “Transfer to a Private Sector Purchaser”ie “without need for consent of the failed bank, or its shareholders, customers or counterparties”… > ALSO…Forcing UK arm to subsidiarise with separate assets in August (when it reached £100m insured deposits) essentially frozen in UK by authorities and then able to be handed to HSBC (ie avoiding parent company/ Fed swiping them back to US) seems impressive UK regulatory success https://twitter.com/faisalislam/status/1635184963414024195 https://twitter.com/faisalislam/status/1635184963414024195
pja 4y ago
The UK mandates that a bank serving UK depositors must do so through a ring-fenced entity. Explanatory link here: https://uk.practicallaw.thomsonreuters.com/w-008-0211?transitionType=Default&contextData=(sc.Default)#co_anchor_a777799 https://uk.practicallaw.thomsonreuters.com/w-008-0211?transi... Relevant quote: “UK banks with GBP25 billion or more in "core deposits" are required to ring-fence their retail and small and medium sized enterprise deposit-taking business into a legally, operationally and economically separate ring-fenced body (RFB). An RFB is prohibited from certain activities such as dealing in complex derivatives, principal and commodity trading activities and operating branches and subsidiaries outside the UK and the EEA.” SVB-UK is RFB setup by SVB in the US as a (presumably wholly-owned) subsidiary of the parent company. The Companies House entry for them is here: https://find-and-update.company-information.service.gov.uk/company/12546585 https://find-and-update.company-information.service.gov.uk/c...
- pja 4y ago
  NB. I don’t think SVB-UK had £25billion in deposits? Reporting says high single digit £billions. It looks like the BoE forced them to create a UK subsidiary anyway if they wanted to keep their UK banking licence.

by AdamN 4y ago

gnfargbl 4y ago

I think the relevant issue is that the national regulators are independent. SVBUK was (is!) regulated by the UK FCA, so on insolvency the FCA is the regulator in charge of resolving issues.

lucozade 4y ago

There doesn't have to be a CEO but there will be a UK legal entity, subject to UK regulation (presumably the PRA) and with its own board.

AdamN 4y ago
Ok I think I get it now. The UK regulator seized the bank and the accounts and sold both to HSBC. The US regulator just seized the accounts, which have now been backstopped fully, and the SVB bank itself is just operating for a while longer as they find a buyer for the carcass?
- justincormack 4y ago
  No SVB has been shut down too. SVB UK is an independent company as of fairly recently. Banks have different regulatory environments than normal companies and no control if things go wrong.
  - AdamN 4y ago
    SVB still has employees that are apparently going to continue to get paid for a number of weeks (years for the ktlo people probably). The creation of a separate entity for all the assets makes me think that they've separated the two and that SVB itself isn't shut down just yet (although clearly it's a carcass as I said before with a value near zero).

samwillis 4y ago

> BoE used special resolution powers to “Transfer to a Private Sector Purchaser”ie “without need for consent of the failed bank, or its shareholders, customers or counterparties”… > ALSO…Forcing UK arm to subsidiarise with separate assets in August (when it reached £100m insured deposits) essentially frozen in UK by authorities and then able to be handed to HSBC (ie avoiding parent company/ Fed swiping them back to US) seems impressive UK regulatory success https://twitter.com/faisalislam/status/1635184963414024195 https://twitter.com/faisalislam/status/1635184963414024195

pja 4y ago

The UK mandates that a bank serving UK depositors must do so through a ring-fenced entity. Explanatory link here: https://uk.practicallaw.thomsonreuters.com/w-008-0211?transitionType=Default&contextData=(sc.Default)#co_anchor_a777799 https://uk.practicallaw.thomsonreuters.com/w-008-0211?transi... Relevant quote: “UK banks with GBP25 billion or more in "core deposits" are required to ring-fence their retail and small and medium sized enterprise deposit-taking business into a legally, operationally and economically separate ring-fenced body (RFB). An RFB is prohibited from certain activities such as dealing in complex derivatives, principal and commodity trading activities and operating branches and subsidiaries outside the UK and the EEA.” SVB-UK is RFB setup by SVB in the US as a (presumably wholly-owned) subsidiary of the parent company. The Companies House entry for them is here: https://find-and-update.company-information.service.gov.uk/company/12546585 https://find-and-update.company-information.service.gov.uk/c...

pja 4y ago
NB. I don’t think SVB-UK had £25billion in deposits? Reporting says high single digit £billions. It looks like the BoE forced them to create a UK subsidiary anyway if they wanted to keep their UK banking licence.