UK Tech Industry In Turmoil As Silicon Valley Bank UK Collapses, Emergency Cash Lifeline
Chancellor Jeremy Hunt has called the issue a “high priority” and has been holding late-night meetings with the prime minister and the Bank of England governor to avoid further fallout. While there is no systemic risk to the UK financial system, there is a “serious risk” to the technology and life sciences sectors, which many of SVB UK’s customers belong to.
The chancellor, Jeremy Hunt
The government has asked affected startups to disclose their cash on deposit at SVB UK, their monthly burn rate, and whether they have access to other bank accounts. Tech industry representatives have been summoned for an emergency meeting with Treasury officials, and there are hopes that the government will consider either reviving SVB UK through a state bailout or private takeover or offering specialized loans for startups at risk of going bust.
The collapse of Silicon Valley Bank – the 16th largest lender in the US – has left many businesses at risk of losing almost all their cash, with only £85,000 of clients’ deposits protected by the Financial Services Compensation Scheme.
This has the potential to cripple the UK tech industry, with many businesses at risk of falling into insolvency overnight. Britain’s biggest high street banks have been given a 24-hour deadline to rescue SVB UK from collapse, with lenders including Barclays and Lloyds Banking Group among those to have been approached by the board of SVB UK over the weekend.
While there is little chance of contagion across the banking sector, tech startups and investors are worried about the ripple effects for the sector.
The shadow chancellor, Rachel Reeves, has called for immediate action from the government to protect the UK’s startup sector, which drives growth and innovation across the economy. This is a crucial moment for the UK tech industry, and it remains to be seen what steps the government will take to prevent further damage.
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