Government to nominate Barclays for bailout deal with Silicon Valley Bank in UK

According to the Financial Times, the government has also received interest from a potential Middle Eastern buyer. Meanwhile, SVB UK has been looking for a British bank to arrange a fire sale, targeting companies including Lloyds, Barclays and the Bank of London, according to Sky News reports. The SVB is to go into forced liquidation tomorrow if intervention is not achieved in the eleventh hour.

Chancellor Jeremy Hunt said this morning he was holding talks with Prime Minister and Bank of England Governor Andrew Bailey to agree on a solution to avert potential widespread damage to the tech sector caused by SVB’s collapse.

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

“The Government is working flat out on 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 the near-term operational and cash flow needs of Silicon Valley Bank’s clients are met UK are able to hit.”

The UK government has already favored Barclays as a trusted tech partner after controversially withdrawing funding from Tech Nation to give to the High Street Bank in January.

The Bank of England said on Saturday morning it would send Silicon Valley Bank UK Limited into bankruptcy proceedings.

Under the process, depositors under the Financial Services Compensation Scheme can be paid up to the protected limit of £85,000 or up to £170,000 for joint accounts. Remaining assets and liabilities are managed by liquidators.

“SVBUK has a limited presence in the UK and no critical functions supporting the financial system,” the Bank of England said. “In the meantime, the company will no longer make payments or accept deposits.”

But numerous London tech firms have said the insured limits are nowhere near enough to pay their employees and they risk going bust.

Matt Clifford, co-founder of venture capital firm Entrepreneur First, said: “[The] The most common sentence in my inbox at the moment is: “We can’t do payroll accounting with the sum insured.”

He told the Standard: “The key question is what happens to those who don’t have access to the money they need. A bunch of them won’t do payroll and a bunch of them will go under.”

On a flight to California to meet US President Joe Biden, Rishi Sunak told reporters there was no systemic risk of contagion from the SVB’s demise, to allay concerns about volatility in the financial sector.

“We don’t think there is a systemic risk of contagion,” Sunak said. “We are working to understand the fears and concerns of the bank’s customers and ensure we can work to find a solution that will secure people’s operational liquidity and cash flow needs.”