Superintendent Of Financial Institutions Takes Temporary Control Of Silicon Valley Bank's Canadian Branch

OTTAWA, ON, March 12, 2023 /CNW/ - Today, the Superintendent of Financial Institutions moved to protect creditors by taking temporary control of the assets of the Canadian branch of Silicon Valley Bank, as well as issuing notice that he intends to seek permanent control of its assets and requesting that the Attorney General of Canada apply for a Winding-Up Order.

Silicon Valley Bank is headquartered in the United States and operates in Canada as a Foreign Bank Branch based in Toronto that is supervised by the Office of the Superintendent of Financial Institutions (OSFI). Its business in Canada is primarily lending to corporate clients. This branch does not hold any commercial or individual deposits in Canada.

The Superintendent took this action to preserve the value of the assets held at the branch in light of the decision by the California Department of Financial Protection and Innovation to shut down Silicon Valley Bank located in Santa Clara, California. The U.S. Federal Deposit Insurance Corporation was appointed as receiver.

Since the onset of the bank's difficulties, OSFI has closely monitored Silicon Valley Bank's Canadian branch. Taking temporary control of the assets of the branch is the latest action taken by OSFI.

Consistent with globally accepted international Basel III standards OSFI continues to undertake diligent supervision of federally regulated banks in Canada, including robust requirements for capital and liquidity adequacy. 

• In January 2022, OSFI announced the implementation of the international Basel III banking reforms, which help ensure federally regulated banks can effectively manage risks by holding increased levels of capital and liquidity, thereby helping to protect creditors during adverse events.
• Foreign bank branches that are distinguished as lending branches are subject to restrictions under subsection 524(1) of the Bank Act and, as such, are prohibited from accepting deposits or otherwise borrowing money, except from financial institutions.
• OSFI granted Silicon Valley Bank an Order to Commence and Carry on Business as a foreign bank branch on February 27, 2019.
• To find out more about what OSFI does when working with institutions please see our video on the Guide to Intervention.

"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. 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."

-  Peter Routledge, Superintendent of Financial Institutions

• California Financial Regulator Takes Possession of Silicon Valley Bank (press release issued by the California Department of Financial Protection and Innovation on March 10, 2023)
• Winding-up and Restructuring Act

The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks. OSFI supervises more than 400 federally regulated financial institutions and 1,200 pension plans to determine whether they are in sound financial condition and meeting their prudential requirements. 

SOURCE Office of the Superintendent of Financial Institutions