Government to meet tech firms following collapse of Silicon Valley Bank UK

theguardian.com:

The UK government is coordinating an emergency meeting with tech firms, who are expected to call for state intervention to avoid the failure of hundreds of firms following the collapse of Silicon Valley Bank UK (SVB UK).

The chancellor, Jeremy Hunt, also spoke with the Bank of England governor, Andrew Bailey, on Saturday morning, just hours after the collapse of SVB UK’s parent company, which marked the largest failure by a bank since the 2008 financial crisis.

The City minister, Andrew Griffith, was also set to meet with industry representatives on Saturday afternoon to “discuss the situation and the worries they face”, though some tech leaders are expected to call for government intervention amid fear that nearly all of their deposits will be wiped out.

“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 Treasury said in a statement.

Silicon Valley Bank – which was the 16th largest lender in the US – collapsed and had its assets seized by US regulators on Friday after a tumultuous 48 hours. The lender been trying to raise emergency funding to plug a near $2bn (£1.7bn) hole in its finances, after a surge in withdrawals from customers in the tech industry who have seen funding dry up in recent months.

While there is little chance of contagion across the banking sector – given that the biggest banks serve a wider range of customers and have plenty of capital – tech start-ups and investors are worried about the ripple effects for the sector.

A open letter signed by nearly 200 tech executives is now being drafted to the chancellor, who has been pushing for greater investment and hopes the UK will be the