It is not only Washington that is scrambling to deal with the collapse of Silicon Valley Bank.
Officials in the UK held all-night talks between Sunday and Monday in a last-ditch effort to find a buyer for SVB’s UK unit, announcing that HSBC would take over the bank with just one hour to spare before the market opened.
The UK bailout deal is the most extreme example of SVB’s global reach forcing governments around the world to pledge to stabilize markets and protect local startups during the collapse of the biggest US bank since 2008.
After the Bank of England said it would seek to start insolvency proceedings for the UK unit of SVB there, officials scrambled to negotiate the sale of local subsidiaries and order direct intervention to protect customers.
On Monday morning, the country’s chancellor took to Twitter to announce that there was a buyer: HSBC. The Bank of England said in a statement that it bought the British unit of SVB for a total of grand £1 ($1.21).
Hunt said on Twitter that depositors would be protected, at no cost to taxpayers.
This morning, the Government and the Bank of England facilitated the private sale of Silicon Valley Bank UK to HSBC
Savings will be protected, without taxpayer support
I said yesterday that we will take care of the technology sector, and we have been working hard to deliver on that promise
— Jeremy Hunt (@Jeremy_Hunt) March 13, 2023
Members of Britain’s startup community are calling on the government to act more aggressively to save the bank. Over 250 tech executives wrote to Hunt on Friday describing the collapse of SVB as an “existential threat” to the country’s technology sector, reports Reuters.
British startups instead pointed to the US response to the SVB, which was announced on Sunday, to encourage officials to do more, with associations representing startups calling Washington’s response a “bar” that London must meet.
Last update for this evening: https://t.co/LPmCWiyHfU pic.twitter.com/DUpuKzFY2J
— Coadec (@Coadec) March 12, 2023
Hunt previously promised to help startups meet their salaries and other cash flow obligations if SVB’s accounts were frozen.
Canada
England was not the only country to experience the effects of SVB’s collapse.
Also on Friday, the Canadian banking regulator took temporary control of SVB Canada’s unit, and said it would seek to wind up the bank’s operations. The Office of the Superintendent of Financial Institutions said it was taking action to protect SVB’s creditors. Unlike in the US, the Canadian arm of the bank does not take deposits.
However, Canadian startups, like their US counterparts, are at risk of account freezes due to SVB’s collapse. One such company, adtech provider AcuityAds Holdings, said 90% of its cash was tied up in SVB deposits.
China
Silicon Valley Bank is also an important partner for many Chinese startups. The bank was one of the first foreign institutions to serve the Chinese technology sector, and Chinese founders flocked to also take advantage of networking opportunities through the bank.
SVB has a joint venture with Shanghai Pudong Development Bank. On Saturday, the joint venture said it “continues to operate stably in accordance with China’s laws and regulations, with a standard governance framework and an independent balance sheet,” in a statement on WeChat, according to WeChat. South China Morning Post.
But it is unclear whether the now-failed US bank can remain a partner in the joint venture as it collapses, according to the report Financial Times.
More than a dozen Hong Kong-listed companies indicated they had deposits in SVB in an exchange filing on Sunday. On Monday, the Hong Kong Monetary Authority, the city’s de facto central bank, said it was monitoring the situation while saying the city’s banking system could withstand SVB’s collapse.
Even countries without Silicon Valley Banks are paying attention to the collapse. The Bank of Korea said that it is ready to stabilize the country’s capital market and currency for any fallout related to SVB.
US response
On Sunday, the US Federal Reserve announced it would protect all deposits at Silicon Valley Bank, including those that violated normal limits for US deposit insurance. Depositors will be able to access their accounts on Monday, officials said.
The Federal Reserve promised similar protection to depositors at Signature Bank, a New York-based bank that also failed over the weekend.
The Federal Reserve also announced a new credit program that allows banks to borrow money from the central bank using bonds and other securities—priced at par, rather than market value—as collateral.
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