Bid launched to save Silicon Valley Bank’s British division
Formal bailout bid for UK branch of collapsed Silicon Valley Bank submitted by Bank of London-led consortium
- The government is doing everything it can to limit the consequences of the crisis for the SVB
- Collapse threatens to destabilize large parts of the UK tech sector
- Bank of London, founded only two years ago, was the first to come up with a proposal
A formal bailout bid for the UK arm of the collapsed Silicon Valley Bank was submitted last night by a consortium led by the Bank of London.
It came as the government rushed to contain the fallout from the crisis at SVB, which threatens to destabilize large parts of the UK technology sector.
Founded just two years ago, the Bank of London is a relative minnow compared to the likes of Barclays and Lloyds – which have also reportedly been polled on 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 the Bank of England amid fast-moving events following SVB’s death last Friday.
Bank of London founder and CEO Anthony Watson said: ‘Silicon Valley Bank should not fail given the vital community it serves.
Bad technology: SVB’s British boss Erin Platts tried to reassure customers on Friday
“This is a unique opportunity to ensure the UK has a more diversified banking sector, whilst enabling continuity of service to SVB’s UK customer base.
“It would be very disappointing if this moment led to further consolidation of power in large banks.”
Another lender, Oaknorth, has also been in talks about a bid, while a Bloomberg report said there was interest from Abu Dhabi’s Royal Group.
Advisors at Rothschild oversee the emergency sale process.
SVB UK reportedly held £7bn in deposits when the Bank of England placed it in insolvency proceedings late Friday. It had requested £1.8bn in short-term funding from the bank before collapsing as billions of pounds were withdrawn.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 transferred to the company from Silicon Valley Bank late last week as its finances unraveled.
SVB UK is led by Erin Platts, an American who first joined the US parent company in 2004 before moving to the UK in 2007 and becoming head of the UK and Europe in 2019.
Platts tried to reassure customers on Friday, hours before the Bank of England intervened, saying the company was a standalone entity with its own board and balance sheet.
The bank, which also serves European clients, only became a separate entity in September.
No to bailout, says Yellen, despite plea for more aid
No bailout: Treasury Secretary Janet Yellen
US authorities last night worked to contain the fallout from Silicon Valley Bank’s demise, fearing that US regional banks could be next to be hit.
Biden administration officials assessed 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 problems at one bank don’t contagion others that are healthy.”
But she ruled out a financial crisis-style bank bailout, adding: “We’re not going to do that again.”
More than 3,500 bosses signed a petition calling on Yellen to protect their deposits at Silicon Valley Bank, claiming that more than 100,000 jobs could be at risk.
The California-based lender, with more than £170 billion in assets, was America’s 16th largest bank. It is the largest bank to fail since the 2008 crisis.
Hedge fund manager Bill Ackman said failure to protect depositors could lead them to pull money from regional banks “and start destroying these important institutions.”