We are wrapping our head around possible long-term effects of the Silicon Valley Bank collapse: CEO
The Office of the Superintendent of Financial Institutions (OSFI) announced it’s taking permanent control of Silicon Valley Bank’s Canadian assets in order to protect creditors, according to a press release.
Additionally, the Ontario Superior Court of Justice granted a winding-up order.
In an announcement on Wednesday, OSFI said the process is intended to “facilitate an orderly transition of the Canadian branch of Silicon Valley Bank to the [U.S. Federal Deposit Insurance Corporation] Bridge Bank.”
“The winding up order under section 10.1 of the Winding-up and Restructuring Act begins an orderly, court-supervised process to restructure the branch as a result of the newly created, full-service U.S. Federal Deposit Insurance Corporation (FDIC) “bridge bank” – Silicon Valley Bridge Bank, N.A. – in a way that best serves the interests of its creditors and will ] operations of the Silicon Valley Bank to continue in Canada,” it said in the release.
Last week, Silicon Valley Bank became the largest U.S. lender to fail in a decade. This came after the bank’s investments were negatively affected by rapidly rising interest rates.
Superintendent of Financial Institutions Peter Routledge said this additional action will “affect an orderly transition of the Canadian branch of Silicon Valley Bank to the FDIC bridge bank.”
“I am satisfied that this approach, developed with officials in the United States, is in the best interest of the branch’s creditors,” Routledge said in the release.
This comes after OSFI took temporary control of Silicon Valley Bank’s Canadian branch on Sunday, saying it would help “preserve the value of the assets held at the branch in light of the decision by the California Department of Financial Protection and Innovation to shut down Silicon Valley Bank located in Santa Clara, California.”
OSFI said the bank’s Canadian business is mainly focused on lending to corporate clients and “does not hold any commercial or individual deposits.”