According to the Wall Street Journal, depositors' funds at the Cayman Islands branch of Silicon Valley Bank (SVB) have been confiscated by the Federal Deposit Insurance Corporation (FDIC). Some institutional depositors say bank statements show that their balance in Silicon Valley banks is zero. A Hong Kong-based private equity firm said it was now doing everything it could to try to recover deposits at the Cayman Islands branch of Silicon Valley Bank.
Previously, Silicon Valley Bank set up a branch in the Cayman Islands, an offshore tax haven, mainly to support the bank's activities in Asia. Many Asian institutional depositors have accounts in Cayman Islands branches and transact through online banking.
At present, neither the US regulator nor Silicon Valley Bank has disclosed how many deposits were made by the Cayman Islands branch of Silicon Valley Bank at the time of the bankruptcy. According to Silicon Valley Bank's annual report, by the end of 2022, the bank had a total of US$13.9 billion (about 96.6 billion yuan) in overseas deposits.
Under the U.S. Federal Deposit Insurance Act, only U.S. domestic deposits can be protected
On March 10 this year, the Federal Deposit Insurance Corporation officially took over Silicon Valley Bank, and its American depositors were quickly "protected". Subsequently, the US branch of Silicon Valley Bank, along with its loans and deposits, was acquired by First Citizen Bank at the end of March. But the Cayman Islands branch of Silicon Valley Bank was excluded from the First Citizens Bank acquisition.
A spokesman for the Federal Deposit Insurance Corporation said that under the Federal Deposit Insurance Act, only domestic deposits in the United States can be protected. At the end of March, the Federal Deposit Insurance Corporation informed depositors at the Cayman Islands branch of Silicon Valley Bank that their deposits would not be covered by deposit insurance and that they would be treated as "general unsecured creditors."
The Cayman Islands, one of the world's famous "financial islands", many Internet companies are registered in the Cayman Islands
The Cayman Islands is a dependency of the United Kingdom in the Caribbean and includes the three islands of Grand Cayman, Little Cayman and Cayman Brac. At present, the number of companies registered in the small Cayman Islands exceeds 100,000, and the world's 50 largest banks have opened branches in the region, in addition to a large number of supporting financial institutions, such as insurance, trusts, funds and other companies. Every day, hundreds of millions of funds are traded in the Cayman Islands, and if you look at the size of the funds transactions, the Cayman Islands is second only to London, New York, Hong Kong and Tokyo, and can be said to be the fifth largest financial center in the world.
Tencent, Baidu, Alibaba, etc., which are well-known Internet companies in the mainland, have registered companies in the Cayman Islands. In 1978, the British government issued a tax exemption decree, which clearly stipulates that if the registered enterprise in the Cayman Islands is less than 20 years old, in addition to paying a very small stamp duty, it does not have to pay any tax at all, and the enterprise does not need to declare shareholder information to the official, and only needs to pay 700 US dollars of maintenance fees per year. In addition, if an enterprise is set up in the Cayman Islands, the advantages of listing the company are obvious.
Those mysterious offshore financial islands
The "financial island" mentioned here refers to a financial offshore center with a small population that occupies a certain position in international finance. Therefore, Hong Kong, China, Singapore and the like are not included. To become an "offshore financial island" is not so simple, first of all, the political situation must be very stable, the security is high, and there will be no security risks. Second, many offshore financial centers have relatively good ties with developed countries and are recognized. Tax advantage is the core competitiveness of offshore financial centers. Moreover, almost all offshore jurisdictions expressly stipulate that the company's shareholder information, equity ratio, income status, etc. enjoy the right to confidentiality, and if the shareholders do not want to, they can not be disclosed to the public.
At present, the major offshore financial centers include the British Virgin Islands, Cayman Islands, Isle of Man, Bahamas, Bermuda, Western Samoa, Anguilla Islands, and many more. Among them, the Cayman Islands, the British Virgin Islands and Bermuda are known as the world's three major offshore financial islands.
Author: Xu Jinhua
Editor: Yan Dan
Executive Producer: Wang Junji
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