A plan to rescue startups and tech companies affected by the Silicon Valley Bank collapse is underway in the United Kingdom, according to multiple reports on March 12. The emergency plan will include a cash lifeline to a number of businesses.
Prime Minister Rishi Sunak said the government is working “at pace” to deliver a plan in the coming hours that would secure “operational liquidity and cash-flow needs” for Silicon Valley Bank’s UK clients. In a statement published today, the U.K. Treasury stated:
“We will bring forward immediate plans to ensure the short-term operational and cash flow needs of Silicon Valley Bank UK customers are able to be met.”
The plan aims to “avoid or minimize damage to some of our most promising companies.” The chancellor’s update also noted that the government is “treating this issue as a high priority, with discussions between the Governor of the Bank of England, the Prime Minister and the Chancellor taking place over the weekend.”
The Bank of England (BoE) halted operations of SVB branches in the U.K. (SVB U.K.) on March 10, stating that it has a “limited presence” in the U.K. and no “critical functions” supporting the financial system.
According to the BoE, a bank insolvency procedure would mean that “eligible depositors” are paid out by the Financial Services Compensation Scheme up to the “protected limit” of £85,000 (approximately $102,288) or up to £170,000 (approximately $204,577) for joint accounts, as “quickly” as possible.
Over 200 founders and CEOs of UK tech companies signed a letter on March 11 calling for government intervention. Addressed to the U.K. Chancellor Jeremy Hunt, the letter claims many fintech firms managed all of their banking operations through SVB, and will “therefore go into receivership imminently unless preventative action is taken”.
Silicon Valley was shut down by California’s financial watchdog on March 10 after announcing efforts to raise $2.25 billion capital to shore up operations. The bank is one of the biggest lenders in the United States, providing banking services for over 40,000 small businesses and many crypto-friendly venture capital firms. According to a Castle Hill audit report, assets from Web3 venture capitalists totaled 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.