HSBC has bailed out the UK arm of the collapsed Silicon Valley Bank after fears Britain's tech sector was on the brink of financial crisis.
On Friday the Bank of England announced Silicon Valley Bank UK was to enter insolvency, after its parent company collapsed in the US.
The shut down of the bank is the largest banking failure since the 2008 financial crisis.
The Government and the Bank of England stepped in to “facilitate” a private sale of SVB to HSBC in order to protect hundreds of promising tech firms in the UK which had deposits in the bank.
Chancellor Jeremy Hunt said no taxpayer money was used in the bailout
PA
It means customers' money has been protected with no taxpayer cash involved.
In a statement this morning confirming a deal, Chancellor Jeremy Hunt said: “The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs.
“Today the Government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support. I am pleased we have reached a resolution in such short order.
“HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”
The Bank of England added that all deposits are “safe and secure” and that customers can "continue to contact SVBUK through the usual channels and borrowers should make any loan repayments to SVBUK as normal".
Prime Minister Rishi Sunak, Chancellor Jeremy Hunt and Bank of England Governor Andrew Bailey are understood to have been working late into the night on Saturday in a frantic bid to find a solution.
Hunt warned yesterday that the collapse of SVB posed "a serious risk to some of our most promising companies in technology and life sciences".
Speaking to the BBC, he added: "These are very important companies to the UK, a very important part of our future."
The Bank of England's Andrew Bailey worked with Jeremy Hunt and Rishi Sunak overnight on Saturday
GB NewsA survey of 31 VC funds found that 34 per cent of their portfolio companies – amounting to 336 – have accounts with Silicon Valley Bank. More than 200 of those now face short or long-term cashflow risk.
The total amount locked into Silicon Valley Bank by these firms is around £2.5billion, according to the data.
Silicon Valley Bank was put under US government control on Friday after being hit by a capital crisis and a bank run.
The Bank of England subsequently ordered its UK subsidiary – the first location it opened outside the US – into insolvency from Sunday evening, putting companies at risk of losing almost all their cash.
