A plan to save startups and tech companies affected by the collapse of Silicon Valley Bank is underway in the UK, according to several reports on March 12. Emergency plans will include a cash lifeline for some businesses.
Prime Minister Rishi Sunak said the government was working “quickly” to deliver a plan within hours that would secure “operational liquidity and cash flow needs” for Silicon Valley Bank’s British clients. In a statement published today, the UK Treasury said:
“We will bring an immediate plan to ensure the operational and short-term cash flow needs of Silicon Valley Bank UK customers can be met.”
The plan aims to “prevent or minimize damage to some of the most promising companies.” The Chancellor’s update also noted that the government “treats this issue as a top priority, with discussions between the Governor of the Bank of England, the Prime Minister and the Chancellor taking place over the weekend.”
The Bank of England (BoE) ended the operations of SVB’s UK branch (SVB UK) on March 10, saying it had a “limited presence” in the UK and no “critical functions” supporting the financial system.
Related: US Treasury Janet Yellen working on SVB collapse, not bailout: Report
According to the BoE, bank insolvency procedures mean that “eligible depositors” are paid by the Financial Services Compensation Scheme up to a “protected limit” of £85,000 (about $102,288) or up to £170,000 (about $204,577) for the combined. account, as “fast” as possible.
More than 200 founders and CEOs of UK tech companies signed a letter on March 11 calling for government intervention. Addressed to British Chancellor Jeremy Hunt, the letter claims many fintech companies manage all their banking operations through the SVB, and will “immediately go into receivership unless preventive action is taken”.
Silicon Valley was shut down by California’s financial watchdog on March 10 after announcing efforts to raise $2.25 billion in capital to keep operations afloat. The bank is one of the largest lenders in the United States, providing banking services to more than 40,000 small businesses and many crypto-friendly venture capital firms. According to Castle Hill’s audit report, the assets of venture capitalist Web3 are more than $6 billion in the bank, including $2.85 billion from Andreessen Horowitz, $1.72 billion from Paradigm and $560 million from Pantera Capital.