By Mark McSherry
The UK government said on Sunday it is “working at pace on a solution to avoid or minimise damage to some of our most promising companies in the UK” amid the collapse of Silicon Valley Bank (SVB).
More than 200 UK tech company executives have urged the UK government to help — warning that many firms that banked with the UK arm of SVB faced an “existential threat.”
The UK Treasury said it will “bring forward immediate plans to ensure the short term operational and cashflow needs of Silicon Valley Bank UK customers are able to be met.”
Michael Moore, director general of the British Private Equity and Venture Capital Association, said: “This is an urgent matter. Help is needed by tomorrow.
“Long-term support will be required to protect the UK’s innovators, entrepreneurs and funders.”
Bloomberg reported that the leaders of 180 tech companies said in an open letter to UK finance minister Jeremy Hunt: “The loss of deposits has the potential to cripple the sector and set the ecosystem back 20 years.”
London’s Financial Times newspaper reported that the UK government is trying to push through a takeover of the British arm of Silicon Valley Bank to prevent damage spreading across the technology sector, with a Middle Eastern buyer having already expressed interest.
The London newspaper said the “lead white knight” is a United Arab Emirates-based company and that Rothschild is leading the process to find a potential buyer for the British entity. Rothschild declined to comment.
The newspaper said SVB UK had nearly £7 billion in deposits when the UK’s central bank deemed it insolvent on Friday.
The UK Treasury said in a statement: “The Bank of England announced on Friday that Silicon Valley Bank UK is set to enter insolvency, following action taken by its parent company in the United States.
“The Bank of England confirmed in its announcement that Silicon Valley Bank has a limited presence in the UK and does not perform functions critical to the financial system.
“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 cashflow positions in the short term.
“The UK has a world leading tech sector, with a dynamic start-up and scale-up ecosystem.
“The government recognises that, given the importance of Silicon Valley Bank to its customers, its failure could have a significant impact on the liquidity of the tech ecosystem.
“The government is treating this issue as a high priority, with discussions between the Governor of the Bank of England, the Prime Minister and the Chancellor taking place over the weekend.
“The government is working at pace on a solution to avoid or minimise damage to some of our most promising companies in the UK and we will bring forward immediate plans to ensure the short term operational and cashflow needs of Silicon Valley Bank UK customers are able to be met.”