Prime Minister, Chancellor meet with BoE chief over Silicon Valley Bank UK collapse

Prime Minister Rishi Sunak and Chancellor Jeremy Hunt are set to hold talks with the Bank of England Governor in response to the collapse of Silicon Valley Bank UK.

In a statement released Sunday morning, the Treasury Department said it was treating the issue “with high priority”.

“The Government is working flat out to find a solution to avoid or minimize damage to some of our most promising businesses in the UK and we will put forward immediate plans to ensure that the short-term operational and cash flow needs of Silicon Valley customers are met Bank UK are guaranteed,” the statement said.

“The Government and Bank understand the level of concern this is causing for Silicon Valley Bank UK clients and in particular how this may affect cash flow positions in the near term.”

It added that the government recognizes that the failure of Silicon Valley Bank UK (SVBUK) “could have a significant impact on the liquidity of the tech ecosystem.”

The Bank of England announced on Friday that Silicon Valley Bank UK will file for bankruptcy following actions by its parent company in the US.

While Silicon Valley Bank (SVB) has a limited presence in the UK and does not perform any functions critical to the financial system, the Coalition for a Digital Economy (Coadec) warned its collapse could have a major impact on tech startups.

Coadec chief executive Dom Hallas said in a statement on Saturday: “It is clear that this could have a significant impact on the UK tech start-up ecosystem.

“Given the concern and panic, I wanted to provide an update on what we know and where we are.

“We know there are a large number of startups and investors in the ecosystem who have significant exposure to SVBUK and will be very concerned.

“We have spoken to the UK Government, including Treasury and No 10, about the potential impact and I know policy options have been worked on overnight.”

The Treasury’s Business Secretary, Andrew Griffith, will hold a roundtable with representatives from affected companies to discuss their concerns.

People look at signs posted outside an entrance to Silicon Valley Bank in Santa Clara, Calif. on Friday (Jeff Chiu/AP)

SVBUK said it would be sent into bankruptcy from Sunday night. It is a subsidiary of Silicon Valley Bank (SVB) and was the first location it opened outside of the United States.

The bankruptcy announcement came after SVB was placed under US government control on Friday afternoon in the biggest US bank failure since the 2008 financial crisis.

The Bank of England said the company will stop making payments and will no longer accept deposits.

The move allows depositors to be paid up to £85,000 out of the deposit guarantee scheme.

A statement on the SVB website reads: “We announce that following discussions with the Prudential Regulatory Authority there is an intention to place Silicon Valley Bank UK Limited in bankruptcy from Sunday evening barring an intervening event.

“We are committed to working on behalf of our customers and take pride in our people’s commitment to you.

“If customers have any questions, please contact us and we will do our best to answer all of your questions.”

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