Wednesday, February 28, 2024

UK finance minister, Bank of England working to minimise SVB fallout

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LONDON, March 11 (Reuters) – Britain’s finance ministry and the Bank of England are working together to minimise the disruption that could stem from the UK arm of collapsed U.S. bank Silicon Valley Bank, the ministry said on Saturday.

Officials from both groups are working closely together, the finance ministry said in a statement, with talks scheduled for later on Saturday to discuss the issues faced by British tech companies affected by the collapse.

“The government recognises that tech sector companies are often not cashflow positive as they grow, and that they rely on cash on deposits to cover their day to day costs,” the statement said.

Britain’s banking system remains strong and resilient, the finance ministry added, saying that the issues affecting Silicon Valley Bank (SIVB.O) were specific to it and did not have implications for other banks operating in the UK.

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British clearing bank The Bank of London is considering a rescue bid for the UK arm of the U.S. bank, Sky News had reported earlier on Saturday.

That came after the Bank of England on Friday said it was seeking a court order to place SVB UK into an insolvency procedure after U.S. regulators took over parent company SVB Financial Group.

Under insolvency proceedings for banks in Britain, some depositors are eligible for up to 85,000 pounds ($102,000) of compensation for lost deposits, or 170,000 pounds for joint accounts.

Britain’s department for Science, Innovation and Technology is also talking to the affected tech firms. A further statement will be issued following the talks on Saturday.

Hargreaves Lansdown head of money and markets Susannah Streeter said there would be aftershocks in the tech sector next week.

“Urgent talks regarding potential takeovers will be ongoing, with regulators under pressure to negotiate bail outs to avoid further damaging fall out,” she said.

Reporting by Sarah Young
Editing by Tomasz Janowski

Our Standards: The Thomson Reuters Trust Principles.

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