‘Down to the wire’: Treasury and Bank scramble for Silicon Valley Bank UK package
Treasury and Bank of England officials are locked in discussions over the future of Silicon Valley Bank’s (SVB) UK arm – with leading tech figures across London suggesting the bank’s collapse could be an extinction-level event for thousands of firms.
The UK-owned subsidiary of Silicon Valley Bank was placed into insolvency earlier this evening, with customers unable to access deposits across the weekend after its US parent fell victim to a confidence crash and a bank run after a botched cash raise last week.
That inability to access banking services would be disastrous for many tech firms, leaving them unable to pay bills and salaries.
Morning Wire understands that the Treasury’s preferred option would be for the sale of SVB UK, though it is also working on a package which would see the British Business Bank step in on an interim basis to provide access to funds for affected firms.
A series of names have emerged as potential buyers, with Barclays, Oaknorth, the start-up Bank of London and an Abu Dhabi investment fund the Royal Group all said to be mulling offers. Sky News’ Mark Kleinman has reported that HSBC is a potential ‘white knight’ too.
Morning Wire understands the process is being led by bankers from Rothschild.
SVB UK has around 3,500 customers in the UK but a large majority of those are in the ‘innovation economy’ – with the bank’s collapse likely to seriously bruise the UK’s continent-leading tech sector.
Dom Hallas, executive director at start-up lobby group Coadec, said it was urgent affected firms got help fast.
“It’s really down the wire now – start-ups are crying out for help and need to know how they can access their cash and pay their suppliers as soon as possible,” he said.
Prime Minister Rishi Sunak said there was no “contagion” risk to the wider banking sector but that is unlikely to quell investor concerns.
Bank shares slid badly on Friday as news of SVB’s failure in the US spooked markets.
Over the weekend, a raft of venture capital players published a joint statement which said “in the event that SVB UK were to be purchased and appropriately capitalised, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them”. The statement was signed by Seedcamp, Lightspeed and Accel among others.
In the US, a similar attempt to sell off the stricken parent bank was underway.