The issues with the bank’s failure, SVB, were “unique to the firm” and had no “implications for other banks operating in the UK,” according to a statement from the British Treasury on Saturday.
The finance ministry stated in a news release that the UK banking system, one of the biggest in the world, “remains strong and resilient,” and that the government was meeting with leaders of the technology sector to address their concerns.
The Silicon Valley Bank (SVB), which is situated in California, was shut down by US authorities on Friday, and the FDIC assumed control.
On Monday, the bank is anticipated to reopen under a new name.
In order to ensure that Silicon Valley Bank UK’s failure “is managed properly, and that any interruption is minimised,” finance minister Jeremy Hunt called with the governor of the Bank of England on Saturday morning.
In addition to speaking with the affected businesses, Treasury officials attended a roundtable with representatives from the industry on Saturday “to address the situation and the worries they confront,” according to the statement.
The statement read, “The government acknowledges that IT sector companies are frequently not cashflow positive as they grow and that they rely on cash deposits to meet their day-to-day costs.
The bank folded following huge withdrawals from its clients, who were mostly in the tech industry, and after its most recent attempt to acquire new capital was unsuccessful.
SVB, a little-known institution that specialised in funding startups, had grown to become the 16th-largest US bank by assets.
Its failure ranks as the second-largest US retail bank failure and the worst bank failure since Washington Mutual in 2008.
The British unit of the bank will be subject to insolvency proceedings, according to the Bank of England.
According to Hargreaves Lansdown financial analyst Susannah Streeter, it was inevitable that the huge decline in trust in SVB would push its UK business into bankruptcy.
She continued, “Despite claims that the British subsidiary was ring-fenced from its parent, the run on the American bank alarmed clients banking there.
According to a report by the British television station Sky News, the Bank of London, which was just established two years ago, is among those considering a bid for the bank’s British division.
ALSO READ: Fallout of the Silicon Valley Bank shut down, check details
