Stay with me on this one.
Last week Silicon Valley Bank (SVB) officially collapsed and threatened to take a number of technology firms with it.
The reasons for its collapse aren’t that important to this particular story but in short as interest rates went up, SVB’s customers needed cash as money became more expensive, and in turn a mass of withdrawals caused a run on the bank.
At a frankly extraordinary pace and at the instigation of the government HSBC acquired SVB UK (the UK branch of SVB) and in doing so assumed its loans of around £5.5bn and its deposits of £6.7bn. Tech investors of all kinds have come out to praise the government and HSBC for their speedy action. While the total number of UK companies invested with SVB UK was relatively small at 3,000 there were genuine concerns that as of Monday this week companies would not have been able to withdraw money from the bank. In short, it would have been a significant blow to the UK’s tech sector.
