The Coalition for a Digital Economy (Coadec), a non-profit campaigning for policies to support digital start-ups, responded to the overnight announcement from the Bank of England that it would apply to put SVBUK into a bank insolvency procedure.
Coadec’s executive director, Dom Hallas, said in a statement on Saturday: “It is clear this could have a significant impact on the UK’s tech start-up ecosystem.
“In light of the concern and panic, I wanted to share an update on what we know and where we are.
“We know that there are a large number of start-ups and investors in the ecosystem who have significant exposure to SVBUK and will be very concerned.
“We have been engaging with the UK Government, including Treasury and No 10, about the potential impact and I know that work has been going on overnight on policy options.”
Chancellor Jeremy Hunt spoke to Bank of England governor Andrew Bailey about minimizing the disruption from SVBUK’s failure, according to the Treasury.
Andrew Griffith, the Economic Secretary to the Treasury, was due to hold a roundtable with representatives from affected firms to discuss their concerns.
Mr Hallas, in a second statement on Saturday evening, said discussions are still ongoing with the Treasury and others and are likely to continue tomorrow.
The Coadec executive attended the roundtable with the Treasury and the Science Department alongside other tech sector stakeholders.
Mr Hallas said: “Of course, the ticking clock is a huge problem for companies. Right now, the key concerns remain immediate liquidity for companies and functional access to banking services on Monday.”
He added that impacted start-ups should maintain contact with the Treasury and urged them to share any other concerns.
SVBUK said it will be put into insolvency from Sunday evening. It is a subsidiary of Silicon Valley Bank (SVB) and was the first location it opened outside the US.
The insolvency announcement came after SVB was put under US government control on Friday afternoon in the biggest failure of a US bank since the 2008 financial crisis.
The Bank of England said the firm will stop making payments and accepting deposits.
The move will allow depositors to be paid up to £85,000 from the deposit insurance scheme.
A statement on the SVB website said: “We are announcing that following conversations with the Prudential Regulatory Authority there is an intention, barring any intervening event, to put Silicon Valley Bank UK Limited into insolvency from Sunday evening.
We are determined to work on behalf of our clients and are proud of our employees in their engagement with you.
“If clients have any questions please get in touch with us and we will try our best to answer any and all of your queries.”
The statement from the Bank of England said: “The Bank of England, absent any meaningful further information, intends to apply to the Court to place Silicon Valley Bank UK Limited (‘SVBUK’) into a Bank Insolvency Procedure.
“A Bank Insolvency Procedure would mean that eligible depositors are paid out by the FSCS as quickly as possible up to the protected limit of £85,000 or up to £170,000 for joint accounts.
“SVBUK’s other assets and liabilities would be managed in the insolvency by the bank liquidators and recoveries distributed to its creditors.
“SVBUK has a limited presence in the UK and no critical functions supporting the financial system.
“In the interim, the firm will stop making payments or accepting deposits.”
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