BRITISH finance minister Jeremy Hunt said on Sunday (12) that he was working with Prime Minister Rishi Sunak and Bank of England Governor Andrew Bailey to "avoid or minimise damage" caused by the chaos at Silicon Valley Bank's UK branch.
"We worked at a breakneck pace over the weekend, through the night," Hunt told Sky News.
"We will present plans very soon to ensure that people are able to meet their cashflow requirements to pay their employees."
Hunt stated that efforts are being made to find a "longer-term solution that minimises, or even completely avoids, losses to some of our most promising companies."
Friday's dramatic failure of the US bank SVB Financial Group, which focuses on tech startups, was the biggest in the US since the 2008 financial crisis.
Given the importance of the bank to its customers, its failure could have a significant impact on some companies, Hunt said.
Advisory firm Rothschild & Co is exploring options for the UK arm, called Silicon Valley Bank UK Limited, as insolvency looms, two people familiar with the discussions told Reuters on Saturday. The BoE has said that it is seeking a court order to place the UK arm into an insolvency procedure.
More than 250 UK tech firm chief executives signed a letter addressed to Hunt on Saturday (11) calling for government intervention, a copy seen by Reuters shows.
Under insolvency proceedings for banks in Britain, some depositors are eligible for up to £85,000 ($102,000) of compensation for cash held at lenders, or £170,000 for joint accounts. Customers may not be able to recover deposits in excess of that.
Hunt reiterated comments by the BoE that overall Silicon Valley Bank has a limited presence in Britain and does not perform functions critical to the financial system.
Still, in the US, the Federal Deposit Insurance Corporation (FDIC), which was appointed receiver, was trying to find another bank over the weekend that was willing to merge with Silicon Valley Bank, people familiar with the matter said, to minimise the fallout.
Some financial industry executives and investors are growing increasingly concerned that the collapse of the bank could have a domino effect on other US regional banks if regulators did not find a buyer over the weekend to protect uninsured deposits.
(Reuters)
The incident occurred on the same day Labour leader Sir Keir Starmer addressed the audience at London Tech WeekGetty Images
The business was started by Sir Anwar Pervez.getty images