Admin l Tuesday, March 14, 2023

FRANKFURT – Germany’s financial supervisory authority on Monday closed the German branch of failed US Silicon Valley Bank (SVB) with immediate effect, the agency said.

The Federal Financial Supervisory Authority (BaFin) cited “the existing danger for the fulfilment of obligations to creditors” as the reason for the closure.

It stressed the bank’s failure has no widespread effect on the German banking sector.

“The distress of Silicon Valley Bank Germany branch does not pose a threat to financial stability,” BaFin said, adding that it had issued a ban on sales and payments to the bank.

The US deposit insurance FDIC on Friday announced it had taken over Silicon Valley-based SVB, which specialized in start-up financing. The bank failed after it could not raise funds under an emergency capital increase.

SVB, which was founded in 1983, had seen immense withdrawals of funds in the days before in the wake of liquidity concerns.

The German operation began on May 30, 2018, and it provided loans to businesses. According to BaFin, the bank did not collect deposits from customers in Germany, so the moratorium has “no consequences for deposit insurance in Germany.”

BaFin said the the balance sheet total of the Frankfurt-based institution amounted to €789.2 million ($843 million) according to the 2022 annual financial statements.