There are questions over how far government should go to cover losses from Silicon Valley Bank collapse.
That was the claim made by Silicon Valley Bank UK last autumn as it celebrated becoming a fully UK-run subsidiary with a promotional video featuring cycle-in branches, ping-pong tables and dogs in the office.
After a decade and a half of near zero interest rates, the rapid rise in rates was going to lead to at best unforeseen, unintended consequences in hitherto stable corners of the system. At worst, the pensions "Liability Driven Investment" crisis was just the first of a series of ticking timebombs in debt markets that had become rather accustomed to borrowing almost for free.Silicon Valley Bank has proved to be one of those ticking timebombs.
The UK arm is too small to impact UK financial stability directly. As a result of its establishment as a full UK subsidiary there should also be plenty of assets there to help mitigate the outflow of deposits. But it is considered economically important to many potentially high growth companies. Its customers' business model means they typically have low profits and revenues, and draw down funds from the bank.
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