News blog on the bankruptcy of the Silicon Valley Bank: The Bank of London clearing bank makes a bid for the SVB division – Yellen: No rescue program planned

Collapse of SVB bank prompts British politicians to plan

British Finance Minister Jeremy Hunt promised rapid liquidity support to start-up companies in Great Britain affected by the collapse of the Silicon Valley Bank (SVB) on Sunday. “The crisis poses a serious risk to our technology and life sciences companies,” Hunt told Sky News. The government will do everything to ensure that companies can pay their employees and meet their cash flow obligations.

The Minister of Finance left open the form in which the aid should be granted and whether taxpayers’ money would also be used for this purpose. It would not only be about short-term liquidity support, but also about a long-term solution. “It’s about the most promising companies in our economy,” emphasized Hunt. British Prime Minister Rishi Sunak has put the promotion of the start-up industry at the center of his economic policy under the motto “Innovation Nation”. The head of government recently announced that he wanted to make Great Britain the “next Silicon Valley”.

However, government aid has been politically sensitive in Great Britain since the 2008 financial crisis. At that time, the government had saved the faltering banks from bankruptcy with billions in aid, which subsequently led to massive criticism from the population.

The SVB crisis has led to acute fears of liquidity bottlenecks in the British start-up scene. In a public letter to the British Treasury Secretary Jeremy Hunt over the weekend, more than 200 founders and bosses of young tech companies called for government intervention in London. “The loss of deposits can cripple the sector and set the ecosystem back 20 years,” the letter reads, “many companies are being sent into involuntary liquidation overnight.” The companies involved are said to employ around 10,000 people in the UK.

Hunt said he has been in crisis talks with Prime Minister Sunak and Fed Chairman Andrew Bailey since the weekend. The Bank of England (BoE) launched the resolution of SVB’s UK arm on Friday, but emphasized that “SVB UK has only a small presence in the UK and has no critical functions for the financial system”.

The start-up founders contradicted this in their public letter: “The assessment by the Bank of England that an insolvency of SVB would only have a limited impact on the British economy shows a dangerous lack of understanding of the sector and its role in it of the economy as a whole, both today and in the future,” it says, according to reports in the British media.

SVB UK is said to employ around 650 people in London but handle the accounts of thousands of business customers. Under UK insolvency law, deposits with the SVB are covered by a government shield up to £85,000. However, the payment can take up to seven days, which is likely to lead to acute liquidity bottlenecks for many companies.

Torsten Riecke, London


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