The collapse of Silicon Valley Bank UK (SVBUK) poses a “serious risk” to the UK’s tech and life sciences sectors, Chancellor Jeremy Hunt has warned.
Ministers have said urgent plans to protect businesses from the fallout are being drawn up.
Talks between Hunt, prime minister Rishi Sunak and Bank of England (BoE) governor Andrew Bailey will take place today.
It comes after the central bank announced Friday that SVBUK – the UK arm of the US firm – was set to enter insolvency, following action by its parent company.
Speaking on Sky News’ Sophy Ridge on Sunday programme, Hunt said: “There is no systemic risk to our financial system, so people should be reassured on that basis.
“But there is a serious risk to our technology and life sciences sectors, many of whom bank with this bank.”
He vowed the government and BoE will do “everything we can” to protect firms affected by the failure of SVBUK.
“The prime minister and I and the governor of the BoE are absolutely determined to do everything we can to protect the future of these very, very important companies,” he said.
“We will come forward with a solution that helps those very, very important companies with things like payroll and their cash flow requirements.
“But we also want to put in place a longer-term solution so that their futures are secure.”
Asked if that meant stepping in with taxpayers’ money, he said he did not “want to go into what the solution is”.
Shadow chancellor Rachel Reeves urged the government to offer more than “warm words”.
She told Sky News: “I am slightly concerned about the urgency that you heard from the Chancellor there.
“When markets open tomorrow morning, a lot of businesses in the UK are not going to be clear about how they can pay the wages of their staff and whether their deposits with SVB and their financing arrangements are still in place.
“I would urge the government to do more than offer warm words, but come forward with specific plans.”
In its announcement, the BoE confirmed SVB has a limited UK presence and “does not perform functions critical to the financial system”.
A HMT spokesperson said the issue was being treated as a “high priority”.
They said: “The government and the BoE understand the level of concern that this raises for customers of SVBUK, and especially how it may impact on cashflow positions in the short term.
“The government is working at pace on a solution to avoid or minimise damage to some of our most promising companies in the UK.
“We will bring forward immediate plans to ensure the short term operational and cashflow needs of SVBUK customers are able to be met.”