Silicon Valley Bank’s Toronto branch assets seized

OTTAWA –

Canada’s banking regulator said it has temporarily seized the assets of Silicon Valley Bank’s Canadian branch.

Frightened depositors pulled billions of dollars out of a US bank in a matter of hours Friday, prompting US banking regulators to quickly shut down the California institution.

A statement from Canada’s Office of the Governor of Financial Institutions said the bank operates in this country as a branch of a foreign bank based in Toronto, which it oversees.

It said Superintendent Peter Rutledge seized the Canadian assets to preserve their value in light of a decision by the California Department of Financial Protection and Innovation to close the bank.

The statement noted that Silicon’s business in Canada primarily lends to corporate customers and that the branch does not have any commercial or personal deposits in Canada.

The inspector has also given notice of its intention to establish permanent control over the assets of the Canadian branch and is asking the Attorney General of Canada to apply for a winding-up order.

“By taking temporary control of Silicon Valley Bank’s Canadian branch, we are acting to protect the rights and interests of the branch’s creditors,” Routledge said in a statement announcing the temporary seizure.

“I want to say clearly. The Canadian branch of Silicon Valley Bank does not accept deposits from Canadians, and this situation is the result of circumstances unique to Silicon Valley Bank in the United States.”

The announcement states that the US Federal Deposit Insurance Corporation has been appointed receiver.

Silicon Valley Bank served primarily technology workers and venture capital-backed companies, including some of the industry’s best-known brands.

It was the second largest bank failure in US history after the collapse of Washington Mutual in 2008.

US Treasury Secretary Janet Yellen said Sunday that the federal government will not bail out Silicon Valley Bank but is working to help depositors worried about their money.

He assured Americans during an interview on CBS’ “Face the Nation” that there would be no domino effect after the Silicon Valley bank collapse and that the American banking system is safe and well capitalized.

Canada’s regulator said it had been closely monitoring Silicon Valley Bank’s Canadian arm since the bank’s troubles began. It further states that in line with global Basel III international standards, it “continues diligent oversight of federally regulated banks in Canada, including capital and liquidity adequacy requirements.”

This report by The Canadian Press was first published on March 13, 2023.