Why SVB collapsed, how it affects UK industry, and why Jeremy Hunt labelled it a ‘serious risk’

March 13, 2023 11:37 am

The Bank of England and the US Treasury Secretary have both tried to reassure investors that its collapse doesn’t represent a wider threat to the banking and technology sectors.SVB was founded in 1983 and has long been a popular choice for investors and entrepreneurs in the technology sector. It was claimed in 2015 that it served 65 per cent of all US start-ups.

On 8 March, SVB announced it needed to raise $2.25bn in order to balance the books after it was forced to sell many of its government bonds at a $1.8bn loss to increase its capital. If insolvency procedures had begun for SVB UK, eligible depositors would have had £85,000 of their money protected or up to £170,000 for joint accounts.

“The Bank and HMT [the Treasury] can confirm that all depositors’ money with SVB UK is safe and secure as a result of this transaction,” the Bank of England said in a statement.

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