In the UK, a crisis plan is being implemented to save startups and tech firms impacted by the bankruptcy of Silicon Valley Bank.
According to several sources on March 12, a strategy to save startups and tech firms impacted by the collapse of Silicon Valley Bank is in the works in the UK. A monetary lifeline will be part of the emergency plan for some enterprises.
The government is moving quickly to deliver a strategy that will meet Silicon Valley Bank’s UK clients’ “operational liquidity and cash-flow needs” in the upcoming hours, according to Prime Minister Rishi Sunak. The UK Treasury said in a statement released today:
“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.”
“Avoid or limit damage to some of our most promising enterprises” is the goal of the plan. In addition, the government is “considering this problem as a high priority, with discussions taking place over the weekend between the Governor of the Bank of England, the Prime Minister, and the Chancellor,” according to the chancellor’s update.
On March 10, the Bank of England (BoE) stopped operating SVB branches in the United Kingdom (SVB U.K.), citing the company’s “limited footprint” and lack of “critical services” supporting the financial system.
The Financial Services Compensation Plan will pay out “qualifying depositors” as “soon” as possible up to the “protected limit” of £85,000 (about $102,288) or up to £170,000 (roughly $204,577) for joint accounts in the event of a bank failure, according to the BoE.
On March 11, more than 200 CEOs and founders of UK tech companies signed a letter requesting government action. Addressed to the U.K. Chancellor Jeremy Hunt, the letter claims many fintech firms managed all of their banking operations through SVB, and will “therefore go into receivership imminently unless preventative action is taken”.
Silicon Valley announced plans to raise $2.25 billion in financing to support operations, but on March 10 it was shut down by California’s financial watchdog.
The bank is one of the largest lenders in the country, offering banking services to more than 40,000 small businesses and numerous venture capital organizations that support cryptocurrencies.
Assets from Web3 venture capitalists totaled more than $6 billion in the bank, with $2.85 billion coming from Andreessen Horowitz, $1.72 billion from Paradigm, and $560 million from Pantera Capital, according to a Castle Hill audit report.