Ajit Karn
After the collapse of a US bank, the British tech sector is at “serious risk.”: UK Minister
London: Chancellor Jeremy Hunt warned on Sunday that the closing of Silicon Valley Bank poses a “serious risk” to Britain’s technology and life sciences industries.
The California-based SVB bank, which was shut down by US authorities on Friday, administers the funds of some of the United Kingdom’s most promising companies, according to Hunt.
In an interview with the British television network Sky News, Hunt stated, “there is a grave risk to our technology and life sciences sectors, many of whom bank with this bank.”
Most people have never heard of the Silicon Valley Bank, but it manages the funds of some of the nation’s most prospective and thrilling companies.
It is anticipated that the bank will reopen under a new name on Monday, with the FDIC assuming control.
Hunt stated that the governor of the Bank of England had made it “very plain” that the collapse of the SVB posed no systemic danger to the UK’s financial system.
The government will present plans “very shortly” to assure that individuals can meet their cash flow needs and pay their employees.
He added that it would also implement a long-term solution to minimise or eliminate losses to British companies.
The British Treasury stated on Saturday that the problems of the defunct SVB bank were “specific to the firm” and did not affect other UK-based institutions.
The bank collapsed after customers, primarily from the technology industry, made significant withdrawals and after its most recent attempt to raise new capital failed.
Little known to the general public, SVB was the sixteenth-largest US bank by assets and specialised in financing startups.
It is not only the largest bank failure since 2008’s Washington Mutual, but also the second-largest US retail bank failure.
Also read: Seized control of SVB due to its inability to meet depositors’ withdrawal demands
The Bank of England announced its intention to pursue insolvency for its British subsidiary.
Susannah Streeter of the financial firm Hargreaves Lansdown stated, “It appeared inevitable that the precipitous loss of confidence in SVB would also cause its UK branch to fail.”
“The run on the U.S. bank frightened customers of the British subsidiary, despite assurances that it was separated from its parent,” she added.
According to Sky News, the Bank of London, which was founded only two years ago, is considering a proposal for SVB’s British subsidiary.
