BRITAIN’s tech businesses breathed a sigh of relief yesterday after 72 hours of chaos ended with HSBC rescuing the UK arm of Silicon Valley Bank.
Following a weekend of frantic calls between the Bank of England, government and regulators, HSBC confirmed that it would buy SVB UK for a token £1.
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The deal immediately stabilised the situation for 3,300 UK customers who had around £6.7billion worth of capital locked up in SVB.
There had been warnings that the shock collapse of SVB would threaten the 14,000 UK tech jobs and some of the country’s most innovative companies.
This at a time when the Government has had ambitions for a UK version of Silicon Valley.
Brent Hoberman, of business development group Founders Forum, said: “This deal is a massive relief for thousands of UK founders and millions of their employees.
“With one fell swoop optimism returns to UK tech. The fear of a tech liquidity collapse had been real.”
The sale to HSBC avoided a taxpayer-backed bailout, which the Government was keen to avoid.
HSBC saw off competition from rival lenders Oaknorth and Bank Of London and a Middle Eastern buyer.
Noel Quinn, chief executive of HSBC, said the deal made “excellent strategic sense”. Despite a number of customers withdrawing money from SVB last week in panic, the bank was still profitable.
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Eileen Burbidge, partner at investment service Passion Capital, said the rescue was important because tech had become “the fabric of the British economy and society.”
While Britain’s tech scene has been safeguarded, shares in more traditional banks in UK, Europe and US took another battering as investors processed whether they too could be caught out by the higher costs of interest rates on bond portfolios.
Another £15billion was wiped off Barclays, Lloyds, NatWest and HSBC.
The FTSE 100 fell as markets were uneasy about the bank failure.
US lender First Republic yesterday suffered a one-day 75 per cent dive in its share price, despite President Joe Biden pledging the US would “do whatever is needed” to reassure Americans their bank deposits were safe.
Q&A
Q: What was Silicon Valley Bank?
A: Founded in 1983, the Californian bank specialised in lending money to tech start-ups.
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SVB UK had 3,300 customers.
Q: What happened?
A: SVB collapsed on Friday.
It invested in long-dated government bonds which have fallen in price since interest rates have risen.
More clients started taking deposits out, which turned to a run on the bank. US regulators shut SVB.
The Bank of England put the UK arm into insolvency.
Q: What did this cause?
A weekend of chaos.
It emerged that the collapse would have a devastating impact on the UK’s technology start-ups.
Q: What now?
A: HSBC has stepped in to rescue the SVB’s UK arm for £1.
Crucially, it means that no taxpayer funds have been called on to bailout the bank and tech firms can access their capital.
E-bike has handle on inflation
FROZEN berries, vegan margarine and e-bikes are now in the basket of goods and services that the Office for National Statistics tracks for price inflation.
The ONS monitors the price of about 600 items and updates them to reflect changes in consumer behaviour.
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The stats body said dairy-free items reflected the growth in veganism in the UK.
Home security cameras have proven so popular that they are also now included.
But alcopops and digital compact cameras have fallen out of the basket.
The ONS said many people “take pictures straight from our phones these days”.
Tampons have also been removed and replaced with sanitary towels.
During the pandemic, men’s suits fell out of the basket of goods — reflecting a trend for more casual gear in lockdowns — but hand sanitiser was added.
Kids care dilemma
ONE in ten families reduce working hours to afford childcare, according to a fresh study by PWC.
The costs of childcare rose by 20 per cent between 2015 and 2022.
As a result, 85 per cent of families say they are concerned about the rising costs and one in five have had to ask friends and family for support so they can continue to work.
The Chancellor is expected to unveil some childcare reforms in the Budget.
Tax break plea
THE boss of Marks & Spencer has called on the Chancellor to use the Budget tomorrow to expand super-deduction tax benefits to energy efficient investments.
The Government introduced a “super-deduction” in 2021.
It gave companies a 130 per cent tax discount for machinery investments but the scheme ends in a couple of weeks.
M&S boss Stuart Machin said: “I have never known the burden on retail sit as heavy as it does today.”
He also wants the apprentice scheme to be widened.
PEOPLE waste £16billion a year on unused subscriptions, a poll of 2,000 adults by Vision Express found.
Households spend nearly £500 a year on subs but two thirds fail to cancel.
Film and music services were the biggest waste of money.
A direct slump
Insurer Direct Line has posted a 95 per cent slump in profits — down to £32million after facing the highest level of weather claims since listing a decade ago.
It was hit by £149million of claims after December’s big freeze led to many households suffering broken boilers and frozen pipes.
The business admitted it had not navigated challenges as “effectively as we would have wished”.
Meanwhile, it’s still looking for a new boss after Penny James parted ways in January.
