A money expert said a scheme in the UK is designed to protect UK bank users from the worst effects of the collapse of the world’s largest financial institution since 2008.
The US-based Silicon Valley Bank (SVB) suddenly failed on Friday, just two days after it announced a $1.75 billion capital raise.
Popular with tech companies and startups, the bank was the 16th largest in the US at the time of its collapse.
Its smaller UK branch, SVB UK, has also been used by many new companies in sectors such as technology and life sciences.
The US government announced shortly after the failure that it would not bail out the bank but would ensure all depositors could access their funds while the search for a potential buyer continued.
A buyer has already been found in the UK as it was announced today that HSBC, Europe’s largest bank, has acquired SVB UK for £1.
But Nick Hill, senior advice manager at the Money and Pensions Service, said Britons concerned about the impact can rest assured that the Financial Services Compensation Scheme offers protection regardless.
He said: “It definitely caught my eye when I saw the headline and I took a slight breath to pause and say, ‘Does this affect me?’
“If someone has less than £85,000 in a financial institution authorized by the UK Financial Conduct Authority then they are covered should anything happen to that firm.
“It’s worth noting that for those lucky enough to have higher balances above £85,000, they can have multiple £85,000s covering them as long as they are in another financial institution.”
He added: “The message is don’t panic, but it’s a good excuse to get involved and understand where your money is and how it’s protected should anything happen.”
People with temporary balances – which could arise as a result of buying or selling a house, going through an inheritance or divorce – could be insured for up to £1,000,000 for six months.
In a statement on today’s sale of SVB UK, the Financial Conduct Authority confirmed that customers of the bank will continue to have access to the Financial Services Compensation Scheme as well as the Financial Ombudsman Service.
Chancellor Jeremy Hunt said the situation for SVB UK customers was “extremely dangerous” prior to the sale to HSBC.
He said: “The UK technology sector is truly a world leader and is of huge importance to the UK economy, supporting hundreds of thousands of jobs.
“I said yesterday that we will look after our technology sector and we have worked hard to deliver on that promise and find a solution that gives SVB UK customers confidence.”
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https://metro.co.uk/2023/03/13/expert-advises-brits-not-to-panic-after-silicon-valley-bank-collapse-18435463/ Expert advises Britons not to panic after Silicon Valley bank collapse