Banks are in talks with the UK Treasury about a potential plan to take on depositors from SVB Financial Group’s British arm in a bid to avoid widescale disruption in the tech sector and to try to calm markets.
(Bloomberg) — Banks are in talks with the UK Treasury about a potential plan to take on depositors from SVB Financial Group’s British arm in a bid to avoid widescale disruption in the tech sector and to try to calm markets.
Some of the country’s biggest lenders have been discussing the idea with ministers Sunday, according to people with direct knowledge of the matter. It’s being prepared as a Plan B if the government fails to find a buyer for the bank, the people said.
Under the plan, several big banks would take on SVB’s depositors, offering them access to money until their funds are released from the lender. SVB is set to enter a resolution process following an announcement by the Bank of England late Friday.
A Treasury spokesperson declined to comment.
There have also been intensive talks about a possible sale. Clearing bank Bank of London Group Ltd. said in a statement on Sunday that it submitted a formal proposal to the Treasury, Bank of England and the board of SVB UK. Royal Group, an investment firm controlled by a top Abu Dhabi royal, and SoftBank Group Corp.-backed lender OakNorth are also among those considering a takeover, Bloomberg reported earlier Sunday.
HSBC Holdings Plc and Lloyds Banking Group Plc were also weighing bids after being asked to consider entering the sale process, Sky News reported.
If the process falls through, banks are requesting a government guarantee as part of the deal, to cover them until the deposits are released from SVB, the people said. The banks may also secure a waiver over anti-money laundering rules, given the speed at which they are set to take on the customers.
The operation may run on the same rails as the Recovery Loan Scheme, which was designed to help businesses grow after the Covid pandemic.
The plan follows a pledge by Chancellor Jeremy Hunt, who said earlier Sunday that the UK will provide immediate support to allow companies to pay their staff and meet cash flow obligations. Many in the tech sector and the venture capital industry have called for the government to step in to support SVB clients.
But several people involved in the talks this weekend have pointed to the potential pitfalls of the government bailing out investors at a time of a national cost of living crisis.
–With assistance from Joe Mayes.
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