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UK Tech Firms Face "Serious Risk" From Silicon Valley Bank Collapse,
Chancellor Warns

https://www.theepochtimes.com/uk-tech-firms-face-serious-risk-from-silicon-valley-bank-collapse-chancellor-warns_5117011.html

There is a “serious risk” to the UK’s technology and life sciences
sectors from the collapse of the UK branch of the California-based
Silicon Valley Bank, Chancellor Jeremy Hunt has warned.

U.S. federal banking regulators on March 10 assumed control of Silicon
Valley Bank (SVB), a top lender for American tech and life sciences
firms and start-ups.

The collapse of SVB, the 16th biggest bank in the United States, is
the largest bank failure since Washington Mutual in 2008, during the
last major bank crisis.

The Bank of England (BoE), the UK’s central bank, announced on March
11 that Silicon Valley Bank UK (SVBUK) is also set to enter
insolvency.

The company will stop making payments and accepting deposits, said the BoE.

Talking to Sky News on Sunday, Hunt said the collapse poses “no
systemic risk” to Britain’s financial system.

But he said, “There is a serious risk to our technology and life
sciences sectors, many of whom bank with this bank.”

Chancellor of the Exchequer Jeremy Hunt (right), with Energy Secretary
Grant Shapps, speaking at a meeting of senior leaders from across UK
green industries at Queen Elizabeth Olympic Park, east London, on Feb.
21, 2023. (Stefan Rousseau/PA Media)
‘Significant Impact’

In a statement on Sunday morning, the Treasury said it was treating
the issue “as a high priority.”

    “The government and the Bank understand the level of concern that
this raises for customers of Silicon Valley Bank UK, and especially
how it may impact on cash flow positions in the short term,” the
statement said.

It added that the government recognises SVBUK’s failure “could have a
significant impact on the liquidity of the tech ecosystem.”

While Silicon Valley Bank has a limited presence in the UK and does
not perform functions critical to the financial system, the Coalition
for a Digital Economy (Coadec) warned that its collapse could have a
significant impact on tech start-ups.

Coadec executive director Dom Hallas said on Saturday:

    “We know that there are a large number of start-ups and investors
in the ecosystem who have significant exposure to SVBUK and will be
very concerned.

    “We have been engaging with the UK government, including Treasury
and Number 10, about the potential impact and I know that work has
been going on overnight on policy options.”

‘Everything We Can’

The chancellor said the government and the Bank of England will do
“everything we can” to protect the firms that stand to lose millions
from the collapse of SVBUK.

    “The prime minister and I and the governor of the Bank of England
are absolutely determined to do everything we can to protect the
future of these very, very important companies,” he told Sky News.

    “We will come forward with a solution that helps those very, very
important companies with things like payroll and their cash flow
requirements, but we also want to put in place a longer-term solution
so that their futures are secure.”

Asked if that could mean stepping in with taxpayers’ money, he said he
did not “want to go into what the solution is.”

Hunt also declined to say whether the government will guarantee all
the deposits of the companies in the collapsed bank.

He told the BBC:

    “We want to find a way that minimises or, if we possibly can,
avoids all losses to those incredibly promising companies. What we
will do is bring forward very quickly a plan to make sure that they
can meet their operational cash flow requirements.”

Labour Calls for ‘Specific Plans’

The main opposition Labour Party has accused the Conservative
government of lacking “urgency” in its handling of the collapse of
SVBUK.

Labour’s shadow chancellor Rachel Reeves urged the government to offer
more than “warm words” to the affected companies.

She told Sky News on Sunday:

    “I am slightly concerned about the urgency that you heard from the
chancellor there, because when markets open tomorrow morning, a lot of
businesses in the UK are not going to be clear about how they can pay
the wages of their staff and whether their deposits with Silicon
Valley Bank and their financing arrangements are still in place.

    “So, I would urge the government to do more than offer warm words,
but come forward with specific plans.”

Talking to the BBC, Reeves said the British start-up industry must not
“pay the price” for the failure of the bank.

She said: “We need tomorrow morning to hear from the government how
they are going to protect them.”

“We cannot let the British start-up community pay the price for this
bank failure, because it will be the British economy then that
ultimately pays the price,” she added.