According to several sources on March 12, a plan to save startups and technology companies impacted by the collapse of Silicon Valley Bank is underway in the UK.
The bank is one of the largest lenders in the country, offering banking services to more than 40,000 small businesses and numerous venture capital organizations that support cryptocurrencies. Assets from Web3 venture capitalists totaled more than $6 billion in the bank, with $2.85 billion coming from Andreessen Horowitz, $1.72 billion from Paradigm, and $560 million from Pantera Capital, according to a Castle Hill audit report.
SVB U.K.’s operations were halted by the Bank of England (BoE) on March 10 due to its limited presence and lack of critical functions supporting and also closed down by California’s financial watchdog.
On March 11, more than 200 CEOs and founders of UK tech companies signed a letter requesting government action. Addressed to the U.K. Chancellor Jeremy Hunt, the letter states numerous fintech firms conducted all of their banking activities through SVB and will “therefore go into receivership imminently unless preemptive action is taken.”
UK government reacts to SVB collapse
The government, as per the statement released by the UK treasury, assured the firms that the government is moving quickly to deliver a strategy that will meet Silicon Valley Bank’s UK clients’ operational liquidity and a financial lifeline would be part of the emergency plan for some firms
The financial system in the U.K.The Financial Services Compensation Plan will pay out “qualifying depositors” as “soon” as possible up to the “protected limit” of £85,000 (about $102,288) or up to £170,000 (roughly $204,577) for joint accounts in the event of a bank failure, according to the BoE.
With this strategy, harm to some of the UK’s most promising enterprises will be avoided or minimized. According to the chancellor’s update, the government is handling this problem as a high priority, with negotiations between the Governor of the Bank of England, the Prime Minister, and the Chancellor taking place over the weekend.