Bank of London, a British clearing bank, is considering a rescue bid for the UK branch of the Silicon Valley bank after more than 250 UK tech executives signed a letter requesting government intervention.
By Reemul Balla, News Reporter @Reemul_B
Sat 11 Mar 2023 21:12 UK
The collapse of the UK branch of Silicon Valley Bank (SVB) is being mitigated by the Treasury and the Bank of England, according to the Treasury.
US regulator shut down The country’s 16th largest bank in the biggest collapse of a financial institution since the 2008 financial crisis.
SVB had failed after depositors – mostly technology workers and venture capital-backed companies – began withdrawing their money, creating a run on the bank.
Despite this failure, the Ministry of Finance maintained that the UK banking system remained strong and resilient, adding that the issues affecting SVB were specific to it and did not have implications for other banks operating in the UK.
NatWest chief gets huge bonus as bank reveals profit rise
Grant Thornton UK partnered to vote on Indian investments
In a bid for government intervention, more than 250 tech company CEOs signed a letter addressed to Chancellor Jeremy Hunt.
It added that SVB’s bankruptcy represented “a potential threat to the UK tech sector” and that the tech founders themselves would be “running the numbers to see whether they were potentially technically insolvent”.
The letter continued: “Most businesses are operating on very good margins in the current economy and the contagion from an early bankruptcy would be vast and affect the economy far beyond the tech sector.”
In a statement, the finance ministry said: “The government recognizes that companies in the tech sector are often not cash-flow-positive as they grow and rely on cash on deposits to cover their day-to-day costs.” “
This is a limited edition of the story so unfortunately this content is no longer available.
open full version
The Bank of England said on Friday it was seeking a court order to keep SVB UK in insolvency process after US regulators took over its parent company SVB Financial Group.
Under insolvency proceedings for British banks, some depositors are eligible for up to £85,000 ($102,000)
Compensation for cash held with lenders, or £170,000 ($204,000) for joint accounts.
Bank of London was considering salvaging the arm of britain But given the SVB’s clearing bank was established only two years earlier, the credibility of a proposal is unclear.
Susannah Streeter, head of money and markets at investment firm Hargreaves Lansdowne, said in an email that there will be aftershocks in the tech sector next week.
Ms Streeter said: “There will be immediate talks about possible takeovers, with regulators under pressure to negotiate a bailout to avoid more damaging repercussions.”