Britain’s biggest high street banks have been given a 24-hour deadline to rescue Silicon Valley Bank UK (SVB UK) from collapse as the Bank of England prepares to place it into an insolvency process.
Sky News has learnt that major UK lenders including Barclays and Lloyds Banking Group are among the parties to have been approached by the board of SVB UK over the weekend to see if an emergency takeover deal can be struck.
City sources said that a number of parties, including The Bank of London, were interested in finalising a deal.
A number of the biggest high street banks are expected to examine the prospects for a deal, although the chances of one of them intervening appeared remote.
An executive at one large UK bank said they had been given access to a data room over the weekend.
Rothschild, the investment bank, has been asked to handle the quickfire process with the permission of the Bank of England, according to one source.
Speaking to Sky News’ Sophy Ridge On Sunday programme, Chancellor Jeremy Hunt said “there is no systemic risk to our financial system” – but added “there is a serious risk to our technology and life sciences sectors”.
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“We are working at pace on a solution we will bring forward very soon plans to make sure people are able to meet their cashflow requirements, pay their staff.”
“But obviously what we want to do is to find a longer-term solution that minimises or even avoids completely losses to some of our most promising companies.”
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1:15
‘Serious risk to tech sector’ after Silicon Valley Bank collapse
The Treasury said in a statement on Sunday: “The UK has a world leading tech sector, with a dynamic start-up and scale-up ecosystem.
“The government recognises that, given the importance of Silicon Valley Bank to its customers, its failure could have a significant impact on the liquidity of the tech ecosystem.
“The government is treating this issue as a high priority, with discussions between the governor of the Bank of England, the prime minister and the chancellor taking place over the weekend.”
The implosion of SVB’s US-listed parent company, which has been taken into government control, represents one of the biggest global banking collapses since the financial crisis of 2008.
UK depositors stand to receive up to £85,000 as part of the resolution of the British arm of SVB, sparking fears about the fate of substantial amounts of funding in the start-up community.
In a letter seen by Sky News, founders including those from Adzuna, Curve and Thriva called on Mr Hunt to intervene.
“The majority of the most exciting and dynamic tech businesses bank with SVB and have no or limited diversity in where their deposits are held,” the draft letter said.
“This weekend the majority of us as tech founders are running numbers to see if we are potentially technically insolvent.
“The impact of this is far greater than our individual businesses.
“The Bank of England’s assessment that SVB going into administration would have limited impact on the UK economy displays a dangerous lack of understanding of the sector and the role it plays in the wider economy, both today and in the future.”
The founders warned Mr Hunt, who will deliver his Budget statement on Wednesday, that the collapse of SVB UK would “cripple the sector and set the ecosystem back 20 years”.
“Many businesses will be sent into involuntary liquidation overnight,” they wrote.
“Many other businesses, both in the tech sector and the wider economy – the customers and suppliers of these businesses – will be negatively impacted by these businesses going bankrupt.”
Interpath Advisory is being lined up to handle the insolvency process in the UK.
A fresh weather warning for snow has been issued for southern England, with cautions for snow and ice already in place across much of the country.
The Met Office’s yellow weather warning for snow covers the southern counties of England from 9am until midnight on Wednesday.
The warning stretches from Kent to Cornwall and up to south London and the Met Office said between two and five centimetres of snow could accumulate fairly widely, with as much as 10cm over higher ground.
This week is expected to see the coldest nights of the year, with temperatures potentially reaching -14C on Wednesday night and -16C on Thursday night, both in the North East of England and Scotland, the Met Office said.
Weather warnings issued on Tuesday for snow and ice covering the Midlands, parts of North Wales, the North West of England, west and northern parts of Scotland as well as Northern Ireland will remain in place until midday on Wednesday.
The forecaster said some roads and railways are likely to be affected and there could be icy patches on untreated roads.
Meanwhile the Environment Agency has said at least 300 properties have flooded across England since New Year’s Eve. It estimates more than 41,000 properties have been protected.
Heavy rainfall over the New Year caused significant river and surface water flooding across the North West of England and Yorkshire and snowmelt has brought further disruption to parts of England, particularly the Midlands, the agency said.
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Man says flooding ‘came out of nowhere’
Floods minister Emma Hardy said: “My sympathies go out to the people, businesses and communities impacted by the recent flooding across the country.
“I want to express my heartfelt thanks for the vital work that the Environment Agency and emergency services are doing to keep people safe. People must continue to follow their advice and sign up for flood warnings.”
Flood warnings
Some 100 flood warnings were in force across England on Wednesday, with people urged to remain vigilant over the coming days.
A danger-to-life warning was issued on Tuesday morning for the River Soar near Barrow upon Soar, Leicestershire, but was later removed.
People living in caravan parks in the area were urged by the Environment Agency to act, with a large-scale evacuation needed to save lives.
Firefighters have rescued dozens of people across Leicestershire since Monday, Leicestershire Fire and Rescue Service said.
Hundreds of schools were closed across the UK, with road and rail links blocked, as Manchester, Bristol and Liverpool John Lennon airports suspended flights because of the conditions.
“And if the victims come forward to me in this victims panel and they say, ‘actually, we think there needs to be a national inquiry into this’, I’ll listen to them.”
Her comments come days after it emerged she had rejected calls from Oldham Council to hold a government inquiry into grooming gangs in the town, and said the council should commission one instead.
That has led to tech billionaire Elon Musk attacking her and Sir Keir Starmer for not holding a national inquiry and accusing the prime minister of being “complicit” in the abuse.
Professor Alexis Jay finished an eight-year national inquiry into child sexual abuse in 2022 and set out recommendations for the government.
She said: “The measures that I’m setting out today and the legislation in many ways go further because it puts a requirement on all councils to have teams working to keep children safe.
“And the bandwagon jumpers that have come along in recent days, they don’t care about children, they don’t care about making sure that we stop this and we take action.
“They had years to do it and they didn’t do it.”
The Conservatives also rejected a call from Oldham Council for a government inquiry in 2022.
You can listen to Beth’s full interview with Jess Phillips in a special episode of Electoral Dysfunction released on Thursday.