(Bloomberg) -- A Canadian court ordered the restructuring of Silicon Valley Bank’s branch in the country, appointing a firm to oversee the shift of assets to a new bridge bank set up by US regulators. 

The process will facilitate an “orderly transition” of SVB’s operations in Toronto to the new entity, Silicon Valley Bridge Bank, that’s operated by the Federal Deposit Insurance Corp., according to a statement. 

“I am satisfied that this approach, developed with officials in the United States, is in the best interest of the branch’s creditors,” said financial superintendent Peter Routledge, whose office took temporary control of the branch on the weekend. PricewaterhouseCoopers will monitor the transition to the bridge bank. 

The Canadian division of Silicon Valley Bank, which received a license to open in 2019, ended last year with C$435 million ($316 million) in secured loans, according to regulatory filings. That was a tiny part of parent company SVB Financial Group’s balance sheet, but it was twice the C$212 million in loans reported a year earlier. 

SVB Financial had only a foreign bank-branch license in Canada, so it wasn’t eligible to take retail deposits. Documents filed with the Office of the Superintendent of Financial Institutions indicate that almost all of the funding for the Canadian operation came from its head office and other financial institutions. 

Bank Stocks Tumble

Canada’s large domestic banks have sizable retail deposit bases and are required to keep relatively high capital ratios. But they’ve been caught up all the same in the global rout in financial shares.  

Smaller banks including Canadian Western Bank and Laurentian Bank of Canada are among the biggest losers, falling 15.3% and 9.5%, respectively, this month. The S&P/TSX Composite Commercial Banks Index has dropped about 8% in March and ended Wednesday at its lowest closing level since Oct. 20. 

Still, that’s far better than the KBW Bank Index, which has plunged 26% this month as SVB’s failure has shattered confidence in some regional banks. 

“While the volatility in capital markets and uncertainty among consumers are certainly negatives for all banks, Canada does again seem to be an island of stability,” Canadian Imperial Bank of Commerce strategists including Ian de Verteuil and Shaz Merwat said in a report to investors. “Canadian regulators continue to conservatively manage banking, requiring stringent capital and liquidity buffers.”

(Updates with additional information and links at the bottom)

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