The U.K. is implementing a plan to rescue start-ups and tech firms hit by the collapse of a Silicon Valley bank, according to multiple reports on March 12. The contingency plan will include a cash lifeline for several businesses.
British Prime Minister Rishi Sunak said the government was working "step by step" on a plan to ensure the "operational liquidity and cash flow needs" of SVB's UK clients. HM Treasury announced on 12 March: "We will present plans immediately to ensure that the short-term operational and cash flow needs of SVB's UK clients can be met."
The plan is designed to "avoid or minimize damage to some of our most promising companies." The Chancellor's update also stated that the government "has treated this issue as a high priority, with the Governor of the Bank of England, Prime Minister and Chancellor of the Exchequer There will be discussions over the weekend."
The Bank of England (BoE) ceased operations at SVB's UK branch on March 10, stating that it had a "limited presence" in the UK and had no "critical functions" to support the financial system. According to the BoE, the bank's insolvency proceedings mean that the Financial Services Compensation Scheme will pay "eligible depositors" up to £85,000 (about $102,288) or a "protected limit" of up to £170,000 (about $204,577) for joint account, as "fast" as possible.
On March 11, more than 200 founders and CEOs of British tech companies signed a letter calling for government intervention. The letter, addressed to Chancellor of the Exchequer Jeremy Hunt, said many fintechs managed all their banking through SVB and would therefore "go into immediate administration unless precautions are taken."
Silicon Valley Bank was shut down by California financial regulators on March 10 after announcing efforts to raise $2.25 billion in capital to support operations. The bank is one of the largest in the United States, providing banking services to more than 40,000 small businesses and many crypto-friendly venture capital firms. Assets from Web3 venture capitalists total more than $6 billion at the bank, including $2.85 billion from Andreessen Horowitz, $1.72 billion from Paradigm and $560 million from Pantera Capital, according to an audit report by Castle Hill.
