Formal rescue bid for UK arm of collapsed Silicon Valley Bank submitted by consortium led by Bank of London
- Government scrambling to limit fallout from crisis at SVB
- Collapse threatens to destabilise swathes of Britain’s tech sector
- Bank of London, founded just two years ago, was first to put forward a proposal
A formal rescue bid for the UK arm of collapsed Silicon Valley Bank was last night submitted by a consortium led by the Bank of London.
It came as the Government scrambled to limit the fallout from the crisis at SVB, which threatens to destabilise swathes of Britain’s tech sector.
The Bank of London, founded just two years ago, is a relative minnow compared with the likes of Barclays and Lloyds – which have reportedly also been sounded out over bids.
But it was the first to put forward a proposal to be considered by the company’s board as well as the Treasury and Bank of England amid fast-moving events following SVB’s demise last Friday.
The Bank of London’s founder and chief executive Anthony Watson said: ‘Silicon Valley Bank cannot be allowed to fail given the vital community it serves.
Bad tech: SVB’s UK boss Erin Platts sought to reassure clients on Friday
‘This is a unique opportunity to ensure the UK has a more diversified banking sector, whilst allowing continuity of service to SVB’s UK client base.
‘It would be deeply disappointing for this moment to lead to further consolidation of power among big banks.’
Another lender, Oaknorth, has also been in talks over a bid while a Bloomberg report said there had been interest from Abu Dhabi’s Royal Group.
Advisers at Rothschild are overseeing the emergency sale process.
SVB UK was reported to have held £7billion in deposits when the Bank of England put it into an insolvency process late on Friday. It had applied for £1.8billion in short-term funding from the Bank before collapsing as billions of pounds were withdrawn.
Fintech company Revolut saw a 16-fold increase in funds being transferred to it from Silicon Valley Bank at the end of last week as its finances unravelled.
SVB UK is led by Erin Platts, an American who first joined its US parent company in 2004 before moving to Britain in 2007 and taking over as UK and Europe boss in 2019.
Platts sought to reassure clients on Friday, hours before the Bank of England intervened, saying the business was a standalone entity with its own governance and balance sheet.
The bank, which also covers European clients, only became a separate entity in September.
No to bailout, says Yellen, despite plea for more help
No bailout: Treasury secretary Janet Yellen
US authorities were last night working to contain the fallout from Silicon Valley Bank’s demise amid fears that America’s regional banks could be the next to be hit.
Biden administration officials were assessing the impact of the collapse on other lenders as well as venture capital firms.
Treasury secretary Janet Yellen told CBS News: ‘We want to make sure that troubles at one bank don’t create contagion to others that are sound.’
But she ruled out a financial crisis style bank bailout, adding: ‘We are not going to do that again.’
More than 3,500 bosses signed a petition appealing to Yellen to protect their deposits at Silicon Valley Bank, claiming more than 100,000 jobs could be at risk.
The California-based lender, with more than £170billion in assets, was America’s 16th biggest bank. It is the largest bank to fail since the 2008 crisis.
Hedge fund manager Bill Ackman said failing to protect depositors could see them pull funds from regional banks ‘and begin the destruction of these important institutions’.