Banking on Gibraltar

The banking industry has been in a state of flux and undergone significant changes in recent years, with a series of high-profile mergers, acquisitions, and scandals affecting some of the biggest names in the sector. Some of the most recent and notable changes include the collapse of Silicon Valley Bank, the issues faced by Silvergate and Signature Bank, and the acquisition of Credit Suisse by UBS.

Silicon Valley Bank has been one of the most prominent players in the tech industry, providing banking and financial services to start-ups and tech companies. The exact reason for their demise is unlikely to emerge anytime soon, however this did not deter commentators from speculating and coming to their own conclusions, with the consensus pointing at the fact that bank did not have enough assets to withstand the extra rules and oversight implemented by the 2018 Economic Growth, Regulatory Relief and Consumer Protection Act. The main problem was their inability to hedge increased interest rates, whilst also funding long-term investment securities using short-term deposits, ultimately, creating complications within their balance sheets.

On 10 March 2023, the Bank of England announced that they intended to put Silicon Valley Bank’s UK arm SVB UK into Bank Insolvency before later releasing a further statement on the 13 March informing the public that they had taken the decision to implement and approve their sale to HSBC. Under the terms of this sale, SBV UK would continue to operate as usual, and all depositors’ money would indeed be secure and not affected by their parent company’s dire situation. The sale itself was made possible by the Bank of England and HM Treasury with the use of the Special Resolutions Regime.

Earlier this week, Silicon Valley Bank themselves were acquired by First Citizens Bank. According to the latest information from the Federal Deposit Insurance Corporation, First Citizens Bank will assume $110 billion worth of assets, deposits of $56 billion and loans of $72 billion.

We have also seen Silvergate Bank enter into liquidation under the pressures of the current economic climate following the downfall of their high-profile clients FTX and Genesis. On the heels of this story and the closure of Silicon Valley Bank, New York based and crypto-friendly service provider, Signature Bank was recently shutdown by regulators in an attempt to safeguard and protect depositors. In a joint statement released by the Treasury, Federal Reserve and FDIC it was announced that Signature Bank would be closed by its state chartering authority and that “all depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer”.

In Switzerland and just in time to throw another spanner in the works, UBS recently acquired Credit Suisse for CHF 3 billion in a historic government-brokered deal. The acquisition has been seen as a move to contain the threat posed across global financial markets, whilst also strengthening UBS's position in the Swiss banking industry.

As these changes take place in the banking industry, there is a need for legal professionals who can help clients and projects obtain bank accounts. Gibraltar is an attractive option for banking given its competitive taxes, proximity to Europe and Africa, and United Kingdom equivalent regulatory standards. As service providers ourselves, we must play an essential role in helping clients navigate the complex regulations and requirements involved in setting up bank accounts in Gibraltar. This is particularly relevant given our prominence in the crypto sector and our focus on remaining at the forefront of standard setting in these markets. Gibraltar is an excellent option for banking, and with the right legal support, clients can successfully set up bank accounts and achieve their financial objectives.

Please feel free to reach out for more information or advice on how to find banking solutions.

Email: jerome.compson@hassans.gi