UK Rushes To Minimize Damage From SVB Collapse – 03/12/2023

By Andrew MacAskill

LONDON (Reuters) – British Prime Minister Rishi Sunak said on Sunday the government was working on a solution to limit the potential impact on British businesses of the failure of U.S. bank Silicon Valley and its British subsidiary United.

Sunak told reporters he understood the “concern and concerns of the bank’s customers”. He said he and the government “are making sure that we can work to find a solution that guarantees the operational liquidity and cash flow needs of the people.”

The dramatic collapse on Friday of SVB Financial Group, an organization focused on technology startups, was the biggest failure of a US bank since the 2008 financial crisis.

People familiar with the talks told Reuters that potential buyers for SVB’s UK subsidiary have been approached.

Britain’s finance minister, Jeremy Hunt, said earlier on Sunday that the collapse could have a significant impact on British technology companies given the importance of the bank to some clients.

“We worked at a breakneck pace over the weekend, overnight,” Hunt told Sky News. “We will come out with plans very soon to make sure that people can meet their cash flow needs to pay their employees.”

Efforts have been focused on finding a “long-term solution that will reduce, or completely avoid, losses for some of our most promising companies,” Hunt said.

Hunt reiterated the BoE’s comments that Silicon Valley banks, in general, had a limited presence in the UK and did not perform important functions of the financial system.

Opposition Labor MP Rachel Reeves urged Hunt to offer more than “warm words” for businesses, saying the government must put in place a plan by the time the financial markets open on Monday morning.

In the US, the Federal Deposit Insurance Corporation (FDIC), which has been named as the bank’s trustee, was trying to find another institution over the weekend that would be willing to merge with SVB, people familiar with it said. It’s on Friday.

(Reporting by Andrew MacAskill and William Schomberg; Additional reporting by Elizabeth Piper, Lawrence White, Ian Weathers, Parangot Kaur and Sinead Cruz)