As the situation begins to solidify around Silicon Valley Bank, many international companies that interacted in one way or another with the US regional bank are now trying to understand the implications of the bank’s failure. Regulators in Canada and Germany have decided to freeze Silicon Valley Bank’s branches in these respective countries, but SVB had very limited operations in foreign markets.
While Silicon Valley Bank officially operated in several countries, most of its international operations consisted of offices or representative offices with local teams. In other words, the banking operations were ultimately handled by Silicon Valley Bank in the US.
There are a couple of exceptions to this structure. In the UK, Silicon Valley Bank set up a proper subsidiary. As you may have learned by now, Silicon Valley Bank UK also faced a bank run before HSBC UK acquired the UK arm for £1 to ensure continuity of banking services.
In China, Silicon Valley Bank formed a joint venture with Shanghai Pudong Development Bank. For now, the Sino-US joint venture says it is “unaffected by the turmoil surrounding the US lender,” as Bloomberg reported. But the Chinese founders are concerned that the situation is still developing in the country.
Silicon Valley Bank’s UK subsidiary had representative offices in the Nordic countries, Denmark and Sweden more specifically. The activities were quite limited in these countries, since you cannot generate sales from a representative office; you can only execute non-transactional operations.
Similarly, Silicon Valley Bank had a representative office in Israel, which means that the Israeli founders were finally doing business with Silicon Valley Bank in the US.
In Canada, Silicon Valley Bank had a branch for corporate lending activities. The bank had no commercial or individual deposits. According to Reuters, the Office of the Superintendent of Financial Institutions (OSFI) decided to take temporary control of the Canadian branch to protect the bank’s creditors in the country.
Similarly, in Germany, BaFin, the country’s financial regulator, decided to freeze Silicon Valley Bank’s local branch in the country. Once again, according to Bloomberg, the regulator wants to make sure the branch can meet its commitments to creditors. The German branch also does not accept deposits.
Overall, Silicon Valley Bank had a limited international presence and the effect on international startups is likely to be limited as well. Even if some entrepreneurs did open a bank account when they raised money from US venture capital firms, the fact that the Federal Reserve and HSBC UK now operate SVB and SVB UK respectively means that most startups should be able to regain access to your funds today.
