German start-ups that had open loans with the German branch of the SVB can breathe a sigh of relief. The German banking supervisory authority (Bafin) has approved the resumption of business operations.
After Silicon Valley Bank ran into difficulties and was shut down by the US authorities, Germany’s financial regulator Bafin reacted last week by ordering a moratorium on the German branch: The Frankfurt-based institution was not allowed to conduct any further banking business. The German branch of Silicon Valley Bank did not manage any deposits. Unlike the bank in the US or the UK, it does not manage money from financing rounds, which would then be unavailable for wage payments, for example.
However, it is one of the largest providers of venture debt, i.e. loans primarily to start-ups. This form of financing has recently become very popular because it allows start-ups to get money quickly at a time when venture capitalists are cautious. Outstanding credit lines have not been serviced since then, as Bafin confirmed to Gründerszene – without, however, classifying the size of these outstanding loan payments at the time.
Startups that had actually taken out a loan to bridge the gap until the next financing round or to pre-finance goods can now breathe a sigh of relief. The collapsed US institution’s business in Germany may continue under new ownership. On Monday, Bafin, the German financial supervisory authority, announced that it had granted Silicon Valley Bridge Bank N.A. permission to operate its credit and proprietary business through its German branch, SVB Germany. Accordingly, SVB Germany has taken over the entire business of Silicon Valley Bank Germany Branch – including equity, receivables and liabilities.