LONDON (Reuters) -British finance minister Jeremy Hunt said on Sunday he was working with Prime Minister Rishi Sunak and Bank of England Governor Andrew Bailey to “avoid or minimise damage” resulting from the chaos engulfing the UK arm of Silicon Valley Bank.
“We’ve been working at pace over the weekend, through the night,” Hunt told Sky News. “We will bring forward very soon plans to make sure people are able to meet their cashflow requirements to pay their staff.”
Hunt said efforts are focused on finding a “longer-term solution that minimises, or even avoids completely, losses to some of our most promising companies.”
Friday’s dramatic failure of the U.S. bank SVB Financial Group, which focuses on tech startups, was the biggest in the U.S. since the 2008 financial crisis.
Given the importance of the bank to its customers, its failure could have a significant impact on some companies, Hunt said.
Advisory firm Rothschild & Co is exploring options for the UK arm, called Silicon Valley Bank UK Limited, as insolvency looms, two people familiar with the discussions told Reuters on Saturday. The BoE has said that it is seeking a court order to place the UK arm into an insolvency procedure.
More than 250 UK tech firm chief executives signed a letter addressed to Hunt on Saturday calling for government intervention, a copy seen by Reuters shows.
Under insolvency proceedings for banks in Britain, some depositors are eligible for up to 85,000 pounds ($102,000) of compensation for cash held at lenders, or 170,000 pounds for joint accounts. Customers may not be able to recover deposits in excess of that.
Hunt reiterated comments by the BoE that overall Silicon Valley Bank has a limited presence in Britain and does not perform functions critical to the financial system.
Still, in the U.S., the Federal Deposit Insurance Corporation (FDIC), which was appointed receiver, was trying to find another bank over the weekend that was willing to merge with Silicon Valley Bank, people familiar with the matter said on Friday, to minimise the fallout.
Some financial industry executives and investors are growing increasingly concerned that the collapse of the bank could have a domino effect on other U.S. regional banks if regulators did not find a buyer over the weekend to protect uninsured deposits.
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(Reporting by Andrew MacAskill and William Schomberg; Editing by Hugh Lawson, Elisa Martinuzzi and Frank Jack Daniel;)