Bank of London weighs rescue bid for UK branch of Silicon Valley bank

Bank of London SVB is exploring the possibility of putting together a resolution for the UK as start-up founder Jeremy Hunt warns its collapse will “cripple” the British tech sector, Sky News learns.

By Mark Kleinman, City Editor @MarkKleinmanSky

Sat 11 Mar 2023 12:38 UK

A new clearing bank is among those bidding this weekend to bail out the British branch of Silicon Valley Bank (SVB), which launched just two years ago.

Sky News has learned that The Bank of London (TBOL), which recently raised funds at a valuation of over $1 billion, is considering making an offer for SVB UK.

News of its interest comes hours after the Bank of England said it plans to use the bank insolvency process to take control of the British operation, which counts thousands of UK start-ups among its customers.

It was unclear at the end of the week how credible an offer from The Bank of London might be, given its own budding position.

A source said it had appointed investment bank Perella Weinberg Partners to advise it about its interest in SVB UK.

Gavin Hewitt, the Bank of London’s new finance chief, was previously at SVB UK, which could provide an advantage in any attempt to get the business up to speed.

The Bank of London is headed by Harvey Schwartz, the new chief executive of giant US private equity firm Carlyle Group, and City insiders speculated that Carlyle could also be involved in an offer.

However, sources close to Carlyle tried to downplay any suggestion that SVB would be interested in participating in the UK takeover.

SVB’s US-listed parent company explodesWhich has been taken under government control, representing one of the biggest banking collapses since the 2008 financial crisis.

UK depositors are expected to receive up to £85,000 as part of the resolution of SVB’s British branch, sparking fears in the start-up community about the fate of substantial amounts of money.

On Saturday dozens of early-stage companies were writing to Chancellor Jeremy Hunt to warn of “a potential threat to the UK tech sector”.

In a draft letter seen by Sky News, the founders of Adzuna, Signal AI, JustPark and Thriva called on Mr Hunt to intervene.

“Most of the most exciting and dynamic technology businesses are with SVBs and have little or no diversification in their deposits,” the draft letter said.

“This weekend most of us as tech founders are running the numbers to see if we are potentially technically bankrupt.

“Its impact goes far beyond our individual businesses.

“The Bank of England’s assessment that SVB going into administration will have a limited impact on the UK economy demonstrates an alarming lack of understanding of the sector and its role in the wider economy, both today and in the future.”

The founders warned Mr Hunt, who will make his budget statement on Wednesday, that the collapse of SVB UK would “paralyze the sector and set the ecosystem back 20 years”.

“Many businesses will be sent into involuntary liquidation overnight,” he wrote.

“Many other businesses in both the tech sector and the broader economy – customers and suppliers of these businesses – would be negatively affected by bankruptcies of these businesses.”

Mr Hunt and Treasury officials were being briefed on Saturday about the preparations for SVB UK’s proposal.

Interpath advisory is being prepared to handle the insolvency process in the UK.

A spokeswoman for the Bank of London said on Saturday: “The Bank of London does not comment on market speculation.”

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