Silicon Valley Bank Failure: Biggest in the US since 2008 Crisis
The failure of US bank SVB Financial Group, which focuses on tech startups, was the biggest in the US since the 2008 financial crisis. Given the bank's importance to some customers, its collapse could significantly impact British technology companies, says Hunt.
Plans to Help Customers Meet Cashflow Requirements
Hunt said that efforts focus on finding a "longer-term solution that minimizes, or even avoids completely, losses to some of our most promising companies." As insolvency looms, advisory firm Rothschild & Co is exploring options for the UK arm, called Silicon Valley Bank UK Limited. The board of SVB UK has approached lenders such as Barclays and Lloyds Banking Group over the weekend to see if an emergency takeover deal can be reached.
Call for Government Intervention by UK Tech Firms
Over 250 UK tech firm executives signed a letter addressed to Hunt calling for government intervention and warned of an "existential threat" to the UK tech sector. Hunt reiterated comments by the BoE that, overall, Silicon Valley Bank had a limited presence in Britain and did not perform functions critical to the financial system.
Support from Tech Firms and Lobby Groups
Tech firms and lobby groups, including the startup industry body Codec, welcomed the pledge to find emergency support, calling it "an acknowledgment of the scale of the challenge." The opposition Labour shadow chancellor Rachel Reeves urged Hunt to offer more than "warm words" to companies, saying the government had to devise a plan when financial markets opened on Monday morning.
UK Aiming to Be the "Next Silicon Valley"
British Prime Minister Rishi Sunak has stated that he wants to turn Britain into the "next Silicon Valley." According to the government, Britain is only behind the United States and China regarding the level of venture capital funding for the sector.
FDIC Appointed Receiver in the US
In the US, the Federal Deposit Insurance Corporation (FDIC), the appointed receiver, was trying to find another bank over the weekend willing to merge with Silicon Valley Bank to minimize the fallout. Some financial industry executives and investors are growing increasingly concerned that the bank's collapse could have a domino effect on other US regional banks if regulators did not find a buyer over the weekend to protect uninsured deposits.