new bank which has only been in business for two years is considering a bid to buy the British arm of the failed Silicon Valley Bank (SVB), according to reports.
The Bank of London (TBOL), whose finance chief Gavin Hewitt previously worked at SVB UK, is said to have appointed an investment bank to advise on a bid, according to Sky News.
SVB imploded after depositors, concerned about the lender’s financial health, rushed to withdraw their deposits.
The frenetic two-day run on the bank blindsided observers and stunned markets, wiping out more than $100billion in market value for US banks.
The collapse could have a significant impact on tech start-ups according to a warning from the Coalition for a Digital Economy (Coadec).
The non-profit campaign for policies to support digital start-ups responded to the overnight announcement from the Bank of England that it would apply to put SVBUK into a bank insolvency procedure.
Coadec’s executive director, Dom Hallas, said: “It is clear this could have a significant impact on the UK’s tech start-up ecosystem.
“In light of the concern and panic, I wanted to share an update on what we know and where we are. We know that there are a large number of start-ups and investors in the ecosystem who have significant exposure to SVBUK and will be very concerned.
“We have been engaging with the UK Government, including Treasury and No 10, about the potential impact and I know that work has been going on overnight on policy options.”
Mr Hallas said information is currently limited but Coadec will give updates in the coming days when it hears more from the Government.
Chancellor Jeremy Hunt has spoken to Bank of England governor Andrew Bailey about minimising the disruption from SVBUK’s failure, according to the Treasury.
Andrew Griffith, the Economic Secretary to the Treasury, is due to hold a roundtable with representatives from affected firms to discuss their concerns.
SVBUK said it will be put into insolvency from Sunday evening. It is a subsidiary of Silicon Valley Bank (SVB) and was the first location it opened outside the US.
The insolvency announcement came after SVB was put under US government control on Friday.
The Bank of England said the firm will stop making payments and accepting deposits.
The move will allow depositors to be paid up to £85,000 from the deposit insurance scheme.
A statement on the SVB website said: “We are announcing that following conversations with the Prudential Regulatory Authority there is an intention, barring any intervening event, to put Silicon Valley Bank UK Limited into insolvency from Sunday evening.
“We are determined to work on the behalf of our clients and are proud of our employees in their engagement with you.
“If clients have any questions please get in touch with us and we will try our best to answer any and all of your queries.”
The statement from the Bank of England said: “The Bank of England, absent any meaningful further information, intends to apply to the Court to place Silicon Valley Bank UK Limited (‘SVBUK’) into a Bank Insolvency Procedure.
“A Bank Insolvency Procedure would mean that eligible depositors are paid out by the FSCS as quickly as possible up to the protected limit of £85,000 or up to £170,000 for joint accounts.
“SVBUK’s other assets and liabilities would be managed in the insolvency by the bank liquidators and recoveries distributed to its creditors.
“SVBUK has a limited presence in the UK and no critical functions supporting the financial system.
“In the interim, the firm will stop making payments or accepting deposits.”