Expert advises Brits not to panic after massive Silicon Valley Bank collapse
A money expert has said a scheme in the UK should protect British bank users from the worst effects of the largest financial institution collapse since 2008.
The US-based Silicon Valley Bank (SVB) failed suddenly on Friday, just two days after it announced a $1.75bn capital raising.
Popular among tech companies and start-ups, the bank was the 16th largest in the USA at the time of its collapse.
Its smaller British arm, SVB UK, was also used by many new firms in areas such as technology and life sciences.
The US government announced soon after the failure that it would not be bailing out the bank, but would ensure all depositers can access their money as the hunt for a potential buyer continues.
In the UK, a buyer has already been found: it was announced earlier today that HSBC, the largest bank in Europe, had acquired SVB UK for £1.
But Nick Hill, Senior Advice Manager at the Money and Pensions Service, said Brits concerned about the impact can be reassured that the Financial Services Compensation Scheme provides protections regardless.
He said: ‘It certainly caught my eye when I saw the headline, and I slightly took a breath to pause and go, “Does that affect me?”
‘If anyone’s got under £85,000 in a UK Financial Conduct Authority-approved financial institution, then they are covered if something was to happen to that firm.
‘It’s worth noting that for those people who are lucky enough to have higher balances above £85,000 that as long as it’s in a different financial institution, then you can be covered by multiple £85,000s.’
He added: ‘The message is not to panic, but it’s a good excuse to engage and understand where your money is and how it’s protected if something was to happen.’
People with temporary balances – which might come about because they’re buying or selling a house, or going through an inheritance or a divorce – could be covered up to £1,000,000 for six months.
In a statement on the sale of SVB UK today, the Financial Conduct Authority confirmed customers of the bank continue to have access to the Financial Services Compensation Scheme – as well as the Financial Ombudsman Service.
Chancellor Jeremy Hunt said the situation facing SVB UK customers had been ‘extremely dangerous’ before the sale to HSBC.
He said: ‘The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs.
‘I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.’
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