Canadian Regulator Seizes Assets of Toronto Branch of Silicon Valley Bank

A food delivery worker enters Silicon Valley Bank in Santa Clara, Calif., on Mar. 10, 2023. The Canadian Press/AP-Jeff Chiu

Canada’s banking regulator says it has temporarily seized assets of the Canadian branch of Silicon Valley BankSilicon Valley

Fearful depositors withdrew billions of dollars from the U.S. bank in a matter of hours Friday, forcing U.S. banking regulators to urgently close the California-based institution.

In a statement, Canada’s Office of the Superintendent of Financial Institutions says the bank operates in this country as a foreign bank branch based in Toronto, which it supervises.

It says Superintendent Peter Routledge seized the Canadian assets to preserve their value in light of the decision by the California Department of Financial Protection and Innovation to shut the bank down.

The statement notes Silicon’s business in Canada is primarily lending to corporate clients, and that the branch does not hold any commercial or individual deposits in Canada.

The superintendent has also given notice of an intention to seek permanent control of the Canadian branch’s assets and is requesting the Attorney General of Canada apply for a winding-up order.

“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 the statement that announced the temporary seizure.

“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 statement noted the U.S. Federal Deposit Insurance Corporation was appointed as receiver.

Silicon Valley Bank served mostly technology workers and venture capital-backed companies, including some of the industry’s best-known brands.

It was the second biggest bank failure in U.S. history after the collapse of Washington Mutual in 2008.

U.S. Treasury Secretary Janet Yellen said Sunday that the federal government would not bail out Silicon Valley Bank, but is working to help depositors who are concerned about their money.

She reassured Americans during an interview with CBS' “Face the Nation” that there will be no domino effect after the collapse of Silicon Valley Bank, and that the American banking system is safe and well capitalized.

Canada’s regulator said it has closely monitored Silicon Valley Bank’s Canadian branch since the onset of the bank’s difficulties. It further stated that consistent with globally accepted international Basel III standards, it “continues to undertake diligent supervision of federally regulated banks in Canada, including robust requirements for capital and liquidity adequacy.”