The collapse of Silicon Valley Bank and it’s UK arm won’t have a serious impact on other British banks, the Treasury has claimed. The finance ministry tried to ease fears of market catastrophe on Saturday after one of the US’ largest banks was shut down by regulators. But Chancellor Jeremy Hunt refused on Sunday morning to confirm if the Treasury would step in to save 100 percent of deposits at Silicon Valley Bank UK.
Silicon Valley Bank (SVB) collapsed earlier this week as depositors rushed to withdraw money over fears about the bank’s health.
Its downfall marks the biggest US bank failure since the height of the financial crisis almost 15 years ago.
The collapse of the bank is also expected have a major impact on stock markets when they open on Monday.
The Treasury said in a statement that problems linked to the failure of Silicon Valley Bank were “specific to the firm” and added that the company’s collapse would have no “implications for other banks operating in the UK.”
Jeremy Hunt has declined to say whether the Government will guarantee 100 percent of the deposits of the companies standing to lose millions from the Silicon Valley Bank UK collapse.
He told the BBC’s Sunday with Laura Kuenssberg programme: “We want to find a way that minimises or, if we possibly can, avoids all losses to those incredibly promising companies.
“What we will do is bring forward very quickly a plan to make sure that they can meet their operational cash flow requirements.”
Pressed again on whether he will guarantee all the money the firms have with the bank, he said: “You’ll have to wait to see the whole plan.”
But senior figures in the tech and financial sectors are taking a far less optimistic view after SVB’s collapse.
Garry Tan, CEO of Y Combinator, a startup incubator that launched Airbnb, told Associated Press that the collapse of SVB was an “extinction-level event for startups.”
He said: “I literally have been hearing from hundreds of our founders asking for help on how they can get through this. They are asking, ‘Do I have to furlough my workers?'”
The billionaire investor Bill Ackman also warned that the US government had two days to fix an “irreversible mistake” following the collapse of SVB.
Posting on Twitter on Saturday, he said: “The gov’t has about 48 hours to fix a-soon-to-be-irreversible mistake. By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank.”
He added that a “failure to guarantee” SVB deposits would lead to “vast and profound” unintended consequences.
UK bank stocks were shaken before markets closed on Friday as investors feared a contagion from the collapse of SVB.
HSBC, Lloyds Bank Group, Barclays and Natwest stocks all took small dips on Friday as markets reacted to US regulators stepping in to mitigate the damage of the bank’s failure.
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