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The UK’s Chancellor of the Exchequer and the Bank of England are working to limit the SVB fallout

LONDON, March 11 (Reuters) – Britain’s Treasury and the Bank of England are working together to minimize the disruption that could stem from a collapse of the British arm of Silicon Valley Bank ( SIVB.O ), which has been seized by U.S. regulators, said Ministry on Saturday.

Talks were planned for later on Saturday to discuss the issues facing British technology companies affected by the collapse, the ministry said in a statement.

“The government recognizes that companies in the technology sector are often not cash-flow positive as they grow, and that they rely on cash on deposit to meet their day-to-day costs,” the statement said.

The ministry said the UK’s banking system remained strong and resilient, adding that the problems affecting Silicon Valley Bank were specific to it and did not have implications for other banks operating in the UK.

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More than 250 CEOs of technology firms in Britain signed a letter addressed to Jeremy Hunt, the British Chancellor of the Exchequer (finance minister), calling for government intervention, a copy seen by Reuters shows.

“The latest news that SVB is going into insolvency represents an existential threat to the UK technology sector,” the letter said. “This weekend, the majority of us tech entrepreneurs are running the numbers to see if we’re potentially technically insolvent.”

“Most businesses are operating at very good margins in the current economy, and the contagion from the first insolvencies will be enormous and affect the economy far beyond the technology sector,” the letter said.

Sky News had earlier on Saturday reported that a British clearing bank, the Bank of London, was considering a rescue offer for the British branch of SVB.

The Bank of England said on Friday it was seeking a court order to put SVB UK into insolvency proceedings after US regulators took over parent company SVB Financial Group.

Under UK bank insolvency proceedings, some depositors are eligible for up to £85,000 ($102,000) in compensation for cash held with lenders, or £170,000 for joint accounts.

The UK’s Department for Science, Innovation and Technology is also talking to the tech companies affected. A further statement will be issued after the talks on Saturday.

Susannah Streeter, head of money and markets at investment firm Hargreaves Lansdown, said in an email that there will be aftershocks in the technology sector next week.

“Urgent talks about potential takeovers will continue, with regulators under pressure to negotiate bailouts to avoid further damaging fallout,” Streeter said.

Reporting by Sarah Young and Elizabeth Howcroft; Editing by Tomasz Janowski and David Holmes

Our standards: Thomson Reuters Trust Principles.

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