In March 2023, Silicon Valley Bank (SVB) became the largest American bank to fail since the 2008 global financial crisis.
SVB owned a smaller bank based in the UK called Silicon Valley Bank UK. It showed signs that it would not be able to survive either.
At that point, we stepped in using the authority given to us by Parliament. Our aim was to avoid any wider disruption.
Was Silicon Valley Bank UK bailed out with taxpayers’ money?
No, it was not.
Its business was transferred to another bank (HSBC). No British taxpayers’ money was involved.
During the 2008 global financial crisis, the Government needed to inject money into some banks. At that time, letting a bank fail would not have been only a problem for its customers. It could have threatened the UK’s whole financial system.
The situation has changed.
Since 2009, the Bank of England has been working with banks (and other financial services firms) to put in place a safety system.
This is called 'resolution'. It allows banks to fail safely, without causing harm to the wider economy. Or costing taxpayers a lot of money.
How did the Bank of England manage the failure of Silicon Valley Bank UK?
Thanks to the resolution process, we have a few options when we manage the failure of a bank in the UK. One of those is to close it down (putting it into insolvency). Other options include transferring it to a private company or taking it into public ownership.
With Silicon Valley Bank UK, the best option was to transfer its business to another stronger bank (HSBC). This means that all its services continued as normal. Its customers shouldn’t notice any changes.
Why are banks different to other firms when they fail?
Most businesses would go into insolvency if they failed. It is difficult for employees and owners. But its customers are usually able to find an alternative. It wouldn't cause widespread disruption to the UK's economy and financial system.
Banks, building societies and some other financial firms are different. Lots of people, companies and public services rely on them in a big way for essential functions – such as paying for goods and services and receiving their wages. Banks are also highly connected to each other, so the disorderly failure of one can lead to problems at others.
That's why it's so important we have a plan to manage a failing bank in an orderly way.
That plan is in place for all UK banks. It enabled us to act quickly when Silicon Valley Bank UK showed signs of difficulty.
We’ve used our resolution authority just two other times. In 2011, with Southsea Mortgage and Investment Company Limited and in 2009 with Dunfermline Building Society.
Whatever happens, people who have up to £120,000 in a bank account in the UK will never lose that money. Even if their bank goes bust. Those deposits are 100% guaranteed by what is called the Financial Services Compensation Scheme (FSCS).
In 2023, the deposit protection limit was £85,000. But it increased to £120,000 on 1 December 2025.
Why did SVBUK fail?
SVBUK got into difficulty because its 'parent' company in the US, Silicon Valley Bank, failed. This led to a loss of confidence in SVBUK and many customers withdrew their money. Without the support of its parent bank in the US, SVBUK could not survive on its own.
Silicon Valley Bank in the US also got into trouble because customers withdrew their deposits very rapidly. In order to pay those deposits back, it needed to sell assets quickly at a loss. This led to the failure of the bank and an intervention by the American authorities.
Are other banks in the UK likely to fail?
The British banking system remains resilient, with a strong financial position and robust regulation.
It is our job to make sure banks in the UK have enough financial resources kept aside, in case they ever need to use them.
We test this by putting major ones under regular 'stress tests'. These are to make sure that the banks are resilient to even quite extreme economic scenarios – involving things such as very bad recessions and much higher interest rates.
Even if some banks do get into trouble, there are two other lines of defence. First, we can provide short-term support to a firm experiencing temporary cash-flow problems. And second, we have the special resolution process. This means we can manage a failing bank in an orderly way. That protects the rest of the financial system and keeps disruption to customers to a minimum. It also makes sure taxpayers' money is not at risk.
