Canada's banking regulator seized control of SVB Financial Group’s branch in the country Sunday and said it will seek a legal order to wind up the operation. 

Peter Routledge, the country’s financial superintendent, “took this action to preserve the value of the assets held at the branch” after U.S. regulators shut down the California-based parent bank on Friday, his office said in a statement.

Finance Minister Chrystia Freeland spoke with banking executives and Bank of Canada officials on Sunday evening, and said the government continues to watch the situation. “Canada’s well-regulated banking system is sound and resilient,” she said via Twitter.

SVB received a license to open a foreign bank office in Toronto in 2019. It doesn’t take commercial or retail deposits, and it’s a small part of the bank. The branch ended last year with $864 million (US$627 million) in assets, including $435 million in secured loans, according to regulatory filings.

“By taking temporary control of the Canadian branch of Silicon Valley Bank, we are acting to protect the rights and interests of the branch’s creditors,” Routledge said in a statement. “I want to be clear: the Silicon Valley Bank branch in Canada does not take deposits from Canadians, and this situation is the result of circumstances particular to Silicon Valley Bank in the United States.”

The Council of Canadian Innovators, an industry group, has been reaching out to firms and investors since since SVB failed on Friday, President Benjamin Bergen said in an interview.  

“Currently, the exposure does not appear to be that high for Canadian firms,” Bergan said by phone. “It doesn’t seem to be the same kind of systemic issue that you’re going to see in Silicon Valley.” But there were a few companies that seemed to be struggling to figure out next steps, he said, as cash was stuck at the now-insolvent bank. 

U.S. financial regulators announced a plan Sunday to limit the fallout, creating a new backstop and pledging to protect all depositors’ money. But SVB’s shocking collapse is still likely to exacerbate a funding crunch for tech startups. 

“It’s already become a much more challenging time to raise money, and this is just going to make a bad situation worse,” said Andrew Graham, the head of Borrowell Inc. His Toronto-based company, which offers a digital platform to access credit scores and is backed by a Power Corporation of Canada fund, used to have a multimillion dollar loan with SVB, but is not exposed to the bank now. 

“It’s a very shocking outcome,” Graham added. “This is the loss of a really important funder in the ecosystem.”

The Canadian government is assessing the scope of the country’s exposure to SVB. “We are monitoring and are closely in touch with leaders in the startup and venture community,” Laurie Bouchard, a spokesperson for Industry Minister François-Philippe Champagne, said by email. 

The venture capital arm of Ontario Municipal Employees Retirement System has only minor indirect exposure to SVB through around a handful of its portfolio companies, according to a person familiar with the matter. Omers Ventures isn’t directly exposed to the bank, said the person, who asked not to be identified. A spokesperson for the C$124 billion pension fund couldn’t be reached for comment.