Ordinarily in the UK, although the legal rule says £85 000 is protected per person per bank, in practice the government has typically paid all depositors in full up front even though it takes some time to recover the value of the bank's assets. Politically this is a good idea if it's affordable because even if many depositors are unsympathetic, it only takes a few good causes to make you look like heartless bastards.
Of course, the UK banks are obeying Basel III, whereas SVB had fought hard not to be obliged to obey similar US rules because they're less risky (and thus, less profitable when things go well...). Obviously the liquidity protections in Basel III wouldn't be enough to prevent a run this huge from overwhelming the bank, but the capital requirements may well have meant depositors were less likely to begin such a run, and would also surely make it easier to successfully liquidate the bank if that became necessary.
One reason to pay depositors (not shareholders, fuck 'em) is to shore up confidence in other banks. If I know I will get my money anyway, when I hear Local Bank might be fucked, there's less rush to withdraw my money, thus less risk of a run on Local Bank, thus they are less likely to actually fail. This is why FDIC exists, and why functionally similar (though very different mechanically) schemes exist in many developed countries.
If the US feels obliged to give SVB depositors their money anyway, the lesson is that you can't afford to have banks which will be so vulnerable, they all need to obey Basel III or equivalent (perhaps even more stringent) rules locally.
Of course, the UK banks are obeying Basel III, whereas SVB had fought hard not to be obliged to obey similar US rules because they're less risky (and thus, less profitable when things go well...). Obviously the liquidity protections in Basel III wouldn't be enough to prevent a run this huge from overwhelming the bank, but the capital requirements may well have meant depositors were less likely to begin such a run, and would also surely make it easier to successfully liquidate the bank if that became necessary.
https://www.bis.org/bcbs/basel3.htm
One reason to pay depositors (not shareholders, fuck 'em) is to shore up confidence in other banks. If I know I will get my money anyway, when I hear Local Bank might be fucked, there's less rush to withdraw my money, thus less risk of a run on Local Bank, thus they are less likely to actually fail. This is why FDIC exists, and why functionally similar (though very different mechanically) schemes exist in many developed countries.
If the US feels obliged to give SVB depositors their money anyway, the lesson is that you can't afford to have banks which will be so vulnerable, they all need to obey Basel III or equivalent (perhaps even more stringent) rules locally.