Statement from techUK on the sale of Silicon Valley Bank UK to HSBC
Following the collapse of the US based bank ‘Silicon Valley Bank’ on Friday 10 March, its UK arm ‘Silicon Valley Bank UK’ was placed in insolvency.
Silicon Valley Bank UK (SVB UK) held loans of around £5.5bn and deposits of around £6.7bn with thousands of customers. These customers are a blend of venture capital firms, tech start-ups and other tech businesses.
While the collapse of SVB UK would not have posed a systemic risk to the overall UK financial system, the bank was a major player in the UK tech sector and its collapse put a significant proportion of UK tech firms and venture capital backed businesses at risk.
The affected tech firms were at risk of not being able to access bank deposits and cash to pay staff, pay for facilities such as rent or run their businesses properly from Monday, 13 March. There are currently 6,369 active U.K. start-ups with at least £500,000 of funding. These start-ups employ 1.8 million people and many of them would have been at risk of closure should a recue deal not have been agreed.
techUK has engaged in talks with the Department for Science Innovation and Technology (DSIT) and HM Treasury alongside others from the UK tech and start-up ecosystem since news of the collapse of the Silicon Valley Bank and the insolvency of SVB UK.
The consistent call to action was for the Government to facilitate a solution to protect the deposits and cash flow of at-risk firms who, due to no fault of their own, were put in this position.
Protecting these firms is vital for the future of the UK economy. Start-ups provide the bedrock of the UK tech sector which adds over £150bn to the UK economy every year. Letting these companies fail would have been incompatible with the Government’s objective to make the UK and science and tech superpower.
We are therefore delighted to see that a sale has been agreed with HSBC that will allow SVB UK customers to access their money and resume business operations today. This sale has been worked on at pace by DSIT and Treasury civil servants and the Government deserves significant credit for acting quickly to protect a vital part of the UK’s economy, both for today and for the future benefits these firms will bring.
You can read more on the sale of SVB UK to HSBC here.
techUK’s CEO Julian David joined calls over the weekend with the Government on the sale of SVB UK. A statement from Julian can be found below:
I am sure most of you will have seen the good news that there is a resolution to the crisis in the tech startup and scaleup ecosystem brought about by the collapse of Silicon Valley Bank in the USA and the subsequent insolvency of SVB UK.
It has been a hectic and very alarming weekend for many of us in tech sparked by the news but also by the initial comment from US and UK financial regulators that this was not a systemic issue for the relevant Financial Services Sectors given the relative size of SVB and SVB UK. ‘Keep Calm and Carry On’ has often been a useful message but in this case for the tech sector it was a mistaken one. It failed to address the huge impact of the concentration in the tech startup and scaleup sector of its thousands of clients SVB UK is reported to have and its role as not just an investor but as the primary bank for these companies. Without access to their deposits these companies faced the prospect of not being able to pay staff or rent or suppliers – in short many would also be facing insolvency and the many thousands of people working in this part of the tech sector would be very worried about their jobs!
So, it was very reassuring to have a fast response government in the UK led from the top by the Economic Secretary to the Treasury and the Secretary of State at DSIT on Saturday which convened techUK and many other organisations across the spectrum of tech and financial services sectors to hear from us directly about the exact nature of the problem and to assure us that the government gets it. Its objective was to protect the firms making up the core of new companies in so many areas from financial services to biotech.
As always reassurance is helpful but of course we all wanted to see what would happen, especially after the US government announced measures to protect their companies deposits last night.
Well now we have it. The government has produced a solution with the help of the Bank of England and has announced that Europe’s largest bank HSBC has acquired SVB UK and customers of SVB UK will be able to access their deposits and banking services as normal from today.
It has been a turbulent time for UK tech after a difficult economic backdrop throughout 2022 with companies facing many adjustments to business models. But it also remains a place of opportunity and as the engine of growth for the UK it has the ability to address the challenges we face in the UK. So, it is extremely encouraging to see, right from the top of government including the PM and the Chancellor as well as our own new Science and Technology Department, this commitment to tech and our companies and to see them demonstrate the speed we need to enable becoming the Science and Tech Superpower that we all want.
- Julian David, CEO techUK
Julian David OBE
Julian David is the CEO of techUK, the leading technology trade association that aims to realise the positive outcomes that digital technology can achieve for People, Society, the Economy and the Planet.
Margherita Certo
Margherita is the Head of Press and Media at techUK, working across all communications and marketing activities and acting as the point of contact for media enquiries.
