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Life line for the UK's arm of SVB.

 

SVB sign
Jeremy Hunt said yes­ter­day there was «a ser­i­ous risk» to tech and life sci­ences com­pan­ies that used SVB’s UK bank, with senior founders warn­ing of «carnage» if they were unable to pay wages and bills in the com­ing week. The gov­ern­ment spent the week­end racing to try to sell SVB UK and put together a backup plan to sup­port com­pan­ies whose depos­its are trapped in the ail­ing lender. Treas­ury sec­ret­ary Janet Yel­len said the US gov­ern­ment was work­ing closely with bank­ing reg­u­lat­ors, but dis­missed calls from some of those with money caught up in SVB to launch a full-scale bail­out. Hunt has dis­missed a bail­out of the UK arm of SVB and is instead focus­ing on keep­ing cash flow­ing to tech groups.

Sev­eral people famil­iar with the gov­ern­ment’s attempts to broker a sale said that a Middle East­ern buyer was one of the lead­ing bid­ders. If a buyer can­not be secured, gov­ern­ment offi­cials and reg­u­lat­ors are work­ing on a res­cue plan to provide guar­an­tees for banks to offer new loans to com­pan­ies with money locked in SVB accounts. The scheme will be over­seen by the state-backed Brit­ish Busi­ness Bank, accord­ing to mul­tiple people famil­iar with the talks. The Fin­an­cial Con­duct Author­ity has spoken to banks about tak­ing part in the scheme, accord­ing to one per­son famil­iar with the dis­cus­sions.

It has told them they can take on cli­ents quickly without ful­filling the usual rules on cus­tomer due dili­gence since those cli­ents will have already passed SVB’s onboard­ing pro­cesses, which the FCA has reviewed. However, gov­ern­ment offi­cials said that scheme was not final­ised and a num­ber of details had to be thrashed out before mar­kets opened this morn­ing. SVB UK has 3,300 Brit­ish cli­ents, includ­ing start-ups, ven­ture-backed com­pan­ies and funds, accord­ing to people famil­iar with the bank, although many have depos­its under the £85,000 threshold covered by the fin­an­cial insur­ance scheme. «This is a real moment of crisis for Brit­ish start-ups,» said Dom Hal­las, exec­ut­ive dir­ector of Coa­dec, a lobby group.

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  1. Lucas13 March 2023 at 10:22

    Start-ups need help from the government. The problem is they need this help NOW and the government moves very slowly. It's not going to be pretty...

    ReplyDelete
    Replies
    1. Dylan13 March 2023 at 12:10

      It's going to be tricky to solve this but let's give them the benefit of the doubt. Maybe they won't mess it up? Maybe things will get better, although slowly and start-ups will not have to close down their doors for good. But yes, I agree, we need measures taken this week, not in a month.

      Delete

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