L ast week, if you had heard of Silicon Valley Bank UK, you probably worked in tech. The bank had only been spun out in to a separate entity last summer, after its few thousand corporate customers pushed it over a regulatory threshold, and while SVB had grown to almost hold £10bn of deposits, with £5.5bn of outstanding loans, it was very much a specialist player.
The bank’s selling point was that it understood the needs of the “innovation economy”, something that high street banks frequently failed to acknowledge. A startup might have zero revenue, yet hold £5m in the bank and have 10 employees, a profile fundamentally different from a typical small business. As a result, trying to get something as simple as a corporate credit card could be a surprising hassle, and when SVB arrived on the UK scene, it was enthusiastically adopted by founders and venture capitalists alike.
This week, though, things are different. The Gary Lineker row may have held the collapse of SVB off many UK front pages, but it is far closer to a household name than anyone wanted it to be. And yet, as the dust settles, everything looks … OK? The Bank of England just navigated potentially its largest bank failure since Northern Rock, and early appearances are that it managed to protect depositors without throwing taxpayer money at the problem.
Made in America
The story is different in the US, where SVB’s much larger parent organisation was based. There, the tale is one of a mid-sized regional bank growing too fast, avoiding the steely gaze of regulators and then making a series of bad calls until, by the beginning of this week, it was forced to admit it was having solvency issues.
Like its British subsidiary, the US division specialised in providing
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