The UK government is trying to take over the UK arm of collapsed SVB bank to prevent the damage from spreading across the tech sector, with a deep-pocketed “buyer” in the Middle East already expressing interest.
The collapse of SVB was also in the spotlight in Downing Street at the weekend, as executives from British technology companies pressed the government to limit the damage that would be done if they lost access to their bank accounts. The Bank of England announced later on Friday that it plans to use its bank insolvency procedure to resolve the crisis at Britain’s SVB, which is a legally separate company to the California-based Lending Bank that was closed by US regulators on the same day.
Several people familiar with the UK process said a Middle Eastern buyer was one of the leading bidders, in a move reminiscent of the bailout after the 2008 financial crisis. One of the people described the “white knight” as a company based in the United Arab Emirates. The UAE’s leading sovereign wealth funds, the Abu Dhabi Investment Authority and Mubadala Investment Company, are not involved in the process, people briefed on the matter said. Other active investors in the oil-rich emirate, such as state-owned holding company ADQ and stock exchange conglomerate IHC, both headed by the UAE’s increasingly influential national security adviser Sheikh Tahanon bin Zayed al-Nahyan, declined to comment.
The British government is trying to find a buyer to step in by tomorrow, otherwise it will have to put the bank into insolvency proceedings. Britain’s SVB’s tech arm had almost £7bn of deposits when the BoE already deemed it insolvent on Friday. The Financial Times reported on Friday that SVB’s UK arm had applied to withdraw £1.8bn under the discount window of the BoE, offering short-term funding to banks, hours before it collapsed, as deposit outflows surged. The person added that the UK arm of the bank had lost billions of pounds in deposits ahead of the move to put it into insolvency.
It is the first glimpse of the extent of the failed bank’s UK footprint, as the British arm has operated independently for less than a year and has yet to file accounts reflecting its full balance sheet. While SVB received a UK banking license in 2012, in August 2022 its UK arm became an independent subsidiary with its own balance sheet and regulatory privileges. The British SVB is a subsidiary of the SVB Group, the official parent company of the US banking unit that was taken over by the regulators.
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