15. März 2023
Silicon Valley Bank – 5 von 5 Insights
After a turbulent weekend, the news on Monday morning that HSBC had acquired Silicon Valley Bank UK (SVB UK) caused the UK tech community to breathe a huge sigh of relief.
It was also a very different outcome to the one that seemed destined on Friday when the Bank of England announced it intended to put SVB UK into a bank insolvency procedure.
Over the weekend our multidisciplinary team responded to the rapidly changing situation to support clients and wider ecosystem participants. Shortly after Monday's fantastic news we held a webinar to discuss events over the weekend, what the acquisition means for SVB UK customers and the implications for the UK technology sector.
The Bank of England originally said in its 10 March statement that absent any further meaningful information it intended to place SVB UK into a bank insolvency procedure, noting it had 'a limited presence in the UK and no critical functions supporting the financial system'.
But over the weekend there was a cross-sector effort to convince the government of the significant impact SVB UK failing would have on the UK's innovation economy. Stakeholders from across the UK venture capital ecosystem joined the British Private Equity and Venture Capital Association (BVCA) in gathering and presenting data to emphasise the impact its failure would have on some of the UK's leading tech companies.
This convinced the government that finding a buyer would be in the public interest and it worked with the Bank of England to organise a rescue deal. They looked at a solution and acquirer, conducting talks with several banks including JP Morgan Chase, Oaknorth Bank and the Bank of London before confirming the sale to HSBC on Monday morning.
SVB UK has been acquired by HSBC for £1 in a transaction facilitated by the Bank of England using powers granted by the Banking Act 2009, with no taxpayer money involved. The government navigated extraordinary circumstances and delivered a positive outcome for the UK's tech sector within 72 hours, avoiding a potentially ugly insolvency process.
More than 850 industry figures have put their names to an open letter to the Prime Minister and banking regulators expressing relief about the rescue of SVB UK. On the acquisition Angus Miln, a partner in our Corporate Technology and Life Sciences team remarked:
"I have never seen anything like this in my 25 years in tech. There is a knowledge gap from those not in the ecosystem in terms of how big the problem was and how good this solution was. The industry has dodged a massive bullet on the ecosystem and CEOs across the globe have let out a huge sigh of relief".
Kerry Baldwin, General Partner and Co-Founder of IQ Capital, and former Chair of the BVCA was instrumental in advising the UK Government on this issue, and played a key role in negotiations and mobilising the technology, life sciences and innovation communities to secure this positive outcome. We were lucky enough to be joined by Kerry on our webinar, who commented on the acquisition: "It's an optimal outcome. It wasn't a given throughout the weekend but it's a fantastic result for founders and the whole tech industry".
SVB UK tweeted on Monday morning that following the acquisition it was resuming normal operations. It noted clients shouldn't notice any significant changes but there may be short delays over the next few days as it returns to business as usual.
If you've been unable to access funds due to your only bank account being with SVB UK, it may be wise to review your governance procedures and set up backup accounts (subject to the terms of any facility agreement you might have with SVB UK).
It's also worth keeping an eye out for fraudulent activity over the next few weeks. As David de Ferrars, a partner in our Disputes and Investigations team remarked: "When there is a crisis such as this one, we see an uptick in fraud. SVB UK clients should be careful with moving money from accounts and make sure they verify details with trusted parties".
You can view the full webinar here where the implications for the sector are discussed in more detail. Despite the fantastic result announced a lot of unknowns remain, and it could be some time before we see the real impact on the market.
We're here to support you and have assembled a multidisciplinary team of sector experts to support our clients, contacts and the wider ecosystem participants. Please do reach out to your usual Taylor Wessing contact, or email our team if you have any questions about the situation.
10. March 2023
15. March 2023
von David de Ferrars