LONDON: British finance minister Jeremy Hunt said on Sunday he was working with Prime Minister Rishi Sunak and Bank of England Governor Andrew Bailey to “avoid or minimise the damage” resulting from the chaos engulfing the UK arm of Silicon Valley Bank.

The global impact of Friday’s dramatic failure of the US bank Silicon Valley Bank Financial Group is just starting to appear as the US ruled out a bailout of the institution.

The fall of the SVB, which focuses on tech startups, was the biggest in the US since the 2008 financial crisis.

“We’ve been working at pace over the weekend, through the night,” Hunt told Sky News. “We will bring forward very soon plans to make sure people are able to meet their cash flow requirements to pay their staff.”

More than 250 UK tech firm executives signed a letter addressed to Hunt on Saturday calling for government intervention and warned of an “existential threat” to the UK tech sector, a copy seen by Reuters shows.

US won’t bail out SVB; UK, India, Israel, Kuwait ‘monitoring situation’

Hunt reiterated comments by the BoE that overall, Silicon Valley Bank had a limited presence in Britain and did not perform functions critical to the financial system.

US Treasury Secretary Janet Yellen on Sunday said the government wanted to avoid financial “contagion” from the implosion of the SVB but ruled out a bailout of the institution.

“We want to make sure that the troubles that exist at one bank don’t create contagion to others that are sound,” Yellen said during an interview

with CBS.

Yellen said on Sunday that the government was working with the US deposit guarantee agency, the FDIC, on a “resolution” of the situation at SVB, where approximately 96 per cent of deposits are not covered by the FDIC’s reimbursement guarantee.

Yellen said reforms made after the 2008 financial crisis meant the government was not considering a bailout for SVB.

The US House speaker Kevin McCarthy has said the Biden administration has the tools to handle the situation.

Israeli shares slid more than 2.5pc on the Tel Aviv Stock Exchange (TASE) on Sunday led by financial firms following the SVB episode, while the government vowed to help Israeli tech firms affected.

“We are closely examining the case and following the developments, both immediate and those that may come in the next waves,” said Avidan, the Bank of Israel’s Supervisor of Banks.

Israel’s tech sector is the country’s main growth engine and its relationship with the Silicon Valley region is strong. Many Israeli startups had accounts at SVB although the amounts are not fully known.

India’s state minister for technology said on Sunday he will meet start-ups this week to assess the impact of the collapse, as concerns rise about the fallout for the Indian start-up sector.

“Start-ups are an important part of the new India economy. I will meet with Indian Startups this week to understand the impact on them and how the government can help during the crisis,” Rajeev Chandrasekhar, the state minister for IT said on Twitter.

India has one of the world’s biggest start-up markets, with many clocking multi-billion-dollar valuations in recent years and getting the backing of foreign investors who have made bold bets on digital and other tech businesses.

China’s CSI300 Index dropped 4pc last week with a possibility that the mood could be damped further following the SVB collapse.

Published in Dawn, March 13th, 2023