SVB was fastest collapse since Barings, says Bank of England governor

The collapse of America’s Silicon Valley Bank (SVB) was “the fastest transition from health to death” since the fall of Barings 28 years ago, the Bank of England governor has said.

Andrew Bailey admitted before MPs that the sudden demise of the lender – which also doomed its UK subsidiary – came as a surprise.

Markets were roiled by the failure, with the shockwaves ultimately claiming the head of much larger lender Credit Suisse and rocking other big companies like Deutsche Bank.

Trading has been quieter in recent days, but Bailey told the Finance Committee it was still “a period of heightened tension and vigilance.”

Shock: Bank of England Governor Andrew Bailey admitted before MPs yesterday that the sudden demise of the lender – which also doomed its UK subsidiary – came as a surprise

The speed of the demise of SVB’s UK branch was compounded by social media messages between founders of tech start-ups who banked with the firm, the Treasury Select Committee heard.

They helped fuel a bank run that saw £2.9 billion drained from accounts in a single day, Friday March 10, before the Bank of England stepped in, MPs have been told.

That sparked a frenetic weekend battle to settle the future of the British firm, culminating in a £1 takeover by HSBC that was sealed at 4am Monday.

Bailey said of the collapse of America’s Silicon Valley bank: “It’s probably the fastest transition from health to death since Barings.

“Barings was a Friday-Sunday thing and that was pretty much the same.”

Barings collapsed in 1995 after a lone trader, Nick Leeson, suffered huge losses.

Sam Woods, who heads the bank’s Prudential Regulation Authority, said: “This was an exceptionally high pressure situation.”