The Bank of England has revealed that British technology firms withdrew £2.9bn from the UK subsidiary of Silicon Valley Bank on the day the bank collapsed in the US, exceeding the expected size of withdrawals.

Andrew Bailey, Governor of the Bank, gave written evidence to UK members of Parliament on the collapse of SVB in the US and subsequent rescue by HSBC of its UK subsidiary.

Bailey, along with Andrew Griffith, the economic secretary to the Treasury, were both requested by Harriett Baldwin, chair of the House of Commons Treasury Committee, to give evidence on the topic.

In his response, Bailey said the scale of withdrawals on the day of SVB's collapse on 10 March amounted to 30% of the SVB UK's entire deposit base, and said it was unclear if it could continue to withstand that scale of outflow. 

This withdrawal was prior to HSBC's purchase of SVB UK for £1 on 13 March, which the central bank oversaw.

In his evidence, Bailey said this initial run from the UK branch was caused by the demise of its US parent company, and that it could not have survived on its own without a buyout, as it relied on the SVB network for its technology systems.

In the evidence, Bailey also claimed that the Bank of England had warned US regulators around the risks brewing at SVB before the breakdown in March, stating it had been concerned about "concentration risks" and the lack of diversification of clients.

The BoE's Prudential Regulation Authority "discussed these with both the firm and the San Francisco Federal Reserve", Bailey wrote.


This article was first posted on sister website Investment Week