UK Proposes to Raise Cap on Bank Deposit Insurance to £110,000

(Bloomberg) -- The Bank of England has proposed increasing the limit on deposits legally protected in the event of a bank failure by almost 30%, after a review triggered by the collapse of Silicon Valley Bank two years ago.

The central bank’s regulatory arm is planning a cap of £110,000 ($142,400), versus the current £85,000, according to a statement on Monday. It also wants to expand the Financial Services Compensation Scheme so that it can be used to recapitalize failing firms.

The current UK cap, set in 2017, is far behind the US, where deposits of as much as $250,000 are protected by the Federal Deposit Insurance Corp. In the European Union, the limit is €100,000 ($108,280). 

“The events of 2023 in the banking sector, including the failure of Silicon Valley Bank UK Limited, while not requiring FSCS involvement, highlighted the importance of depositor protection in supporting confidence in the financial system,” the BOE said in a consultation paper published on Monday.

SVB’s UK arm lost 30% of its deposits between March 9 and 10 of that year amid a crisis of confidence in its parent bank in the US, which ultimately sparked broader distress in US regional banks. HSBC Holdings Plc eventually bought SVB UK for a symbolic £1.

“Confidence in our financial system is an essential foundation for economic growth,” Sam Woods, the head of BOE’s Prudential Regulation Authority said in a nod to the UK government’s push for regulators to do more to stoke growth. The PRA also noted that the new limit takes account of inflation.

The proposals, which the BOE will consult on until June 30, also include increasing the limit for temporary high balance claims for “qualifying life events” like selling a house to £1.4 million from £1 million. 

If approved by the Treasury, the changes will come into force on Dec. 1, 2025. 

More stories like this are available on bloomberg.com

©2025 Bloomberg L.P.