Dozens of early-stage tech firms in the UK have warned the chancellor of “an existential threat” to the sector following the failure of Silicon Valley Bank in the US.
The Bank of England has mentioned it is looking for a court docket order to position SVB UK into an insolvency process, after US regulators took over its dad or mum corporate on Friday.
The Treasury and the Bank of England are attempting to minimise the disruption that might stem from a cave in of the UK arm of the financial institution.
But, in a letter addressed to Chancellor Jeremy Hunt, greater than 250 tech company leader executives were fast to voice their issues.
The letter, first reported by way of Sky News City editor Mark Kleinman, mentioned: “The contemporary news about SVB going into insolvency represents an existential danger to the UK tech sector.
“This weekend the majority of us as tech founders are running numbers to see if we are potentially technically insolvent.”
The letter mentioned that the “majority of the most exciting and dynamic tech businesses” financial institution with SVB and feature “no or limited diversity in where their deposits are held”.
It added: “Most businesses are operating on very fine margins in the current economy and the contagion from the initial insolvencies will be vast and impact the economy far beyond the tech sector.”
‘Significant affect on the UK’s tech start-up ecosystem’
The emotions have been echoed by way of the Coalition for a Digital Economy (Coadec), a non-profit campaigning for insurance policies to strengthen virtual start-ups.
Coadec’s govt director, Dom Hallas, mentioned: “It is clear this could have a significant impact on the UK’s tech start-up ecosystem.
“In mild of the fear and panic, I sought after to percentage an replace on what we all know and the place we’re.
“We know that there are a large number of start-ups and investors in the ecosystem who have significant exposure to SVBUK and will be very concerned.
“We were enticing with the UK govt, together with Treasury and No 10, about the doable affect and I do know that paintings has been occurring in a single day on coverage choices.”
Treasury: UK’s banking machine stays sturdy and resilient
The Treasury has insisted that Britain’s banking machine stays sturdy and resilient, including that problems affecting Silicon Valley Bank are explicit to it and should not have implications for different banks in the UK.
Mr Hallas mentioned discussions with the Treasury will proceed lately, including: “Of course, the ticking clock is a huge problem for companies.
“Right now, the key issues stay instant liquidity for corporations and practical get admission to to banking services and products on Monday.”
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Possible salvage bid?
Meanwhile the Bank Of London has declined to touch upon a document that it was once weighing bids to salvage the British arm of SVB.
Sky News reported that the clearing financial institution, introduced simply two years in the past, was once making an allowance for an be offering, even if it was once unclear how credible this is able to be, given its personal fledgling standing.
The Bank of London not too long ago raised price range at a valuation of over $1bn.
