The Bank of England (BoE) is reportedly mulling plans to order international banks to set up subsidiaries in the UK.

People familiar with the matter told the Financial Times (FT) that the UK’s central bank is considering the plans as part of a review following the collapse of Silicon Valley Bank (SVB) after a bank run earlier this year.

Sources added that the plans could reduce the thresholds requiring foreign banks with corporate business in the UK to set up subsidiaries.

The presence of subsidiaries in-country means local regulators have the power assume control of failing banks opposed to leaving their fate in the hands of a given entity’s parent company.

In the case of SVB, which became a subsidiary in the UK around six months before its collapse, the UK government was able to intervene, eventually brokering a £1 sale of its UK operations to HSBC.

However, such plans would likely prove unfavourable for the banking sector as the cost of maintaining fully-fledged subsidiaries is considerably more expensive than just maintaining branches.

Giles French, chief executive of the Association of Foreign Banks, which represents close to 200 foreign banks doing business in the UK, told the FT that the ability for international banks to utilise branches in the UK is a vital part of what makes London a “successful and connected international financial centre”.

“Any change in thresholds would need to be carefully assessed, so it doesn’t deter international banks from operating in the UK and providing essential liquidity and capital,” he said.

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