The Governor of the Bank of England (BoE), and other senior leaders from the central bank, have been called to give evidence to the Treasury Committee on the collapse and rescue of Silicon Valley Bank (SVB) UK, in an effort to learn lessons.
The evidence session, scheduled for 28 March, will be attended by BoE Governor Andrew Bailey, Sir Dave Ramsden, deputy governor for markets and banking at the BoE and Sam Woods, chief executive officer of the Prudential Regulation Authority and deputy governor for prudential regulation at the BoE.
In a letter to the BoE Governor, the cross-party committee of MPs set out a series of questions that it would like answered, including on the “nature” of the central bank’s supervision of SVB UK, what caused the bank to fail and when the BoE first became aware of its problems.
Regarding the sale of SVB UK to HSBC for £1, the Committee has asked specifically why the BoE initially favoured placing SVB UK into insolvency, and the subsequent interactions with Treasury that led to the rescue deal.
The committee also wants to hear from those attending the session about how HSBC came to be the chosen purchaser and the price it paid for SVB UK.
Finally, the Treasury Committee will seek to establish from BoE representatives what lessons can be learned regarding prudential regulation and financial stability, and the possible risk of contagion to other UK banks or financial institutions, as a result of SVB’s collapse.
Harriett Baldwin MP, chair of the Treasury Committee, said: “This deal is the best possible outcome achieved in incredibly challenging circumstances. We thank everyone who worked tirelessly to achieve this deal.
“Yet, while it’s reassuring that taxpayer funds were not required in this instance, a number of questions remain around the effectiveness of bank regulation and resolution procedures, especially for smaller banks with a significant presence in strategically-important industries.”
She added: “It is important that we reflect on the lessons from this episode to ensure that the post-financial crisis regime to avoid bailouts remains strong.”