Crisis From U.S. Bank Collapse Spreads to UK
LONDON (FT) -- The UK chancellor is preparing a dramatic intervention to provide a cash lifeline to scores of tech businesses next week as he seeks to contain the damage caused by the collapse of Silicon Valley Bank.
Jeremy Hunt was looking to “avoid or minimize damage to some our most promising companies in the UK”, the Treasury said in a statement.
“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 Treasury said.
Hunt has ruled out a bailout of the UK arm of SVB and is instead focusing on supporting the cash flow of the many tech groups with deposits at the bank. They could struggle to pay wages and bills next week.
The chancellor is holding talks with Andrew Bailey, Bank of England governor, and Rishi Sunak, prime minister, to finalize a plan, which could be in place as soon as Monday.
More than 200 UK-based tech company executives have urged Downing Street to step in, warning that many companies faced an “existential threat” because they banked with the UK arm of SVB.
Sunak says he wants to turn Britain into “the next Silicon Valley” and is said by government insiders to be determined to contain the fallout for the tech sector from the bank’s collapse.
The Bank of England announced on Friday that Silicon Valley Bank UK was set to enter insolvency, following action taken by its parent company in the U.S., adding that it had a limited presence in the UK and did not perform functions critical to the financial system.
But the Treasury said: “The government and the Bank understand the level of concern that this raises for customers of SVB UK, and especially how it may impact on cash flow positions in the short term.
“The UK has a world leading tech