Around 210 entrepreneurs and executives from start-up firms located in the UK have written a letter to Chancellor Jeremy Hunt expressing their concerns that they could face financial ruin due to the failure of Silicon Valley Bank in America and the subsequent insolvency of its UK branch.
Sources have reported that a letter stated, "Most of us tech entrepreneurs are crunching the numbers to determine if we may be in a state of technical insolvency."
The individuals who signed the document declared that they have over 10,000 workers under their employment and have obtained a sum of £3.5 billion in funding for their business ventures.
According to the FT, a letter stated that many of the most innovative and active technology companies bank with SVB and do not have diverse options for depositing their funds.
Bloomberg reported that a letter requested Mr Hunt to step in and mediate the situation, mentioning that the industry could be severely impacted and might regress by two decades if there were more deposit losses.
Numerous enterprises will be compelled to undergo immediate liquidation.
Cashflow concerns
According to the UK Treasury, Mr. Hunt has had discussions with the Governor of the Bank of England regarding the downfall of SVB. Additionally, talks are underway between the Treasury and certain British advanced technology firms that could potentially be impacted by this situation.
According to a statement from the Treasury, officials from both the Treasury and the Bank of England are collaborating. Additionally, a lower-ranking finance minister will address concerns expressed by certain UK technology companies during discussions with industry representatives scheduled for Saturday.
The government acknowledges that tech industry businesses frequently do not generate enough revenue to cover their expenses as they expand and therefore require deposits of cash to support their everyday operations, according to the announcement.
On Friday, Silicon Valley Bank experienced the largest collapse of any American lending institution in over 10 years. The bank's efforts to obtain additional funding were unsuccessful, resulting in a rush by depositors to withdraw their money.
On Friday, the Bank of England announced that the depositors who are eligible in SVB's British division will receive payments from the United Kingdom's deposit insurance fund.
The Bank of England has stated that deposits are safeguarded and covered for an amount of up to £85,000 ($102,000) or £170,000 for joint accounts.
According to the Bank, SVB UK's presence in the UK is restricted and it does not have any important operations that support the country's financial system.
During the period of time before a certain event takes place, the company will temporarily halt any transactions involving making or receiving financial payments.
On Saturday, Sky News stated that the Bank of London is contemplating a proposal to save the UK branch of SVB. The bank defines itself as an innovative technology firm and the first transaction bank designed for global clearing services.
.The Bank of London declined to provide any statement in response to the circulating speculation.
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