The UK government has stepped in quickly to protect 100s of UK tech firms, which partially relied on finance from SVB to grow their businesses. Silicon Valley Bank in the US has gone into administration, after a rough ride over the last few months. Lemonade has already confirmed that it only had $7000 in SVB, many other tech companies had relatively small percentage of their overall capital in the failed bank, although in some cases that was still $20m plus.
Most insurtech funding rounds tend to be joint ventures, so the start up isn’t reliant on just one source of financial backing. That obviously negates the risk in situtions like this.
As well as offices in London, SVB had also opened up in Denmark, Germany and Sweden, to capitalise on the local fintech/insurtech hubs in western europe. Those offices are now closed. The current volatility in insurtech and fintech financing may well delay the possible sale of Open GI, which Reuters reported on recently.
Meanwhile here’s the news from the UK government;
Silicon Valley Bank (UK) Ltd has today been sold to HSBC. HSBC is headquartered in London, is the largest bank in Europe and is one of the world’s largest banking and financial services institutions, serving 39 million customers globally. Customers of SVB UK will be able to access their deposits and banking services as normal from today.
This transaction has been facilitated by the Bank of England, in consultation with the Treasury, using powers granted by the Banking Act 2009. No taxpayer money is involved, and customer deposits have been protected.
Making use of post-crisis banking reforms, which introduced powers to safely manage the failure of banks, this sale has protected both the customers of SVB UK and taxpayers.
The UK has a world leading tech sector, with a dynamic start-up and scale-up ecosystem and the government is pleased that a private sector purchaser has been found.
Chancellor Jeremy Hunt said:
“The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs. I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.
“Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support. I am pleased we have reached a resolution in such short order.
“HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”
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