More than 200 UK firms at ‘serious risk’ from Silicon Valley Bank collapse

At least 200 UK tech companies are at “serious risk” from the collapse of the British division of Silicon Valley Bank.

Rishi Sunak and the chancellor have held emergency talks with the governor of the Bank of England Andrew Bailey this weekend to come up with a cash lifeline for affected firms as the bank goes into insolvency.

Meanwhile, a number of potential buyers circle the failed lender.

Banking giants HSBC and JP Morgan were among several parties exploring buying the bank’s British operations, Sky News reported. Both declined to comment.

Oaknorth Bank, a business lender founded by former Tory donor Rishi Khosla, was also in takeover talks.

There was also interest from The Bank of London and Abu Dhabi state-backed investment vehicle ADQ, according to Sky.

Discussions were understood to be going on into the evening as officials scrambled to find a buyer before the insolvency deadline.

A survey of 31 venture capital funds, which hold thousands of investments in UK tech and science firms, found that 34 per cent of their portfolio companies – amounting to 336 – have accounts with bank.

More than 200 of those now face short or long-term cashflow risk, according to the data from BVCA – the industry body representing venture capital investors.

Around £2.5 billion of capital from these firms is locked in the lender.

Mr Hunt said the government was “working at pace” to limit the damage and would come up with a plan to help the “cashflow” needs of the bank’s customers in the UK.

“The Bank of England has made it very clear there is no systemic risk to our financial system,” he told Sky News’ Sophy Ridge on Sunday. “But there is a serious risk to our technology and life sciences sectors.”

Mr Hunt added: “We are working at pace on a solution we will bring forward very soon plans to make sure people are able to meet their cashflow requirements, pay their staff.”

Labour’s shadow chancellor Rachel Reeves urged Mr Hunt to offer more than “warm words” to companies – demanding the chancellor comes up with a plan by the time markets open on Monday.

She told Sky News: “When markets open tomorrow morning, a lot of businesses in the UK are not going to be clear about how they can pay the wages of their staff and whether their deposits with Silicon Valley Bank and their financing arrangements are still in place.”

Saying she was “slightly concerned” by the level of urgency shown by Mr Hunt, she added: “I would urge the government to do more than offer warm words, but come forward with specific plans.”

It comes as CEOs of 140 leading UK startups wrote to Mr Hunt on Saturday calling for emergency government intervention.

“This weekend the majority of us as tech founders are running numbers to see if we are potentially technically insolvent.

“The impact of this is far greater than our individual businesses. The Bank of England’s assessment that SVB going into insolvency would have limited impact on the UK economy displays a dangerous lack of understanding of the sector and the role it plays in the wider economy, both today and in the future.”

Chancellor Jeremy Hunt working on emergency plan

Related Articles

Bir cavab yazın

Sizin e-poçt ünvanınız dərc edilməyəcəkdir. Gərəkli sahələr * ilə işarələnmişdir

Back to top button