The Economic Secretary to the Treasury (Andrew Griffith) With your
permission, Mr Speaker, I will make a statement on the steps His
Majesty’s Government have taken to limit risks to our tech and life
sciences sector. Following the rapid deterioration of Silicon
Valley Bank, and working in concert with the Bank of England, early
this morning we facilitated the purchase of the UK subsidiary of
Silicon Valley Bank by HSBC. Serving 39 million customers globally,
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The Economic Secretary to the Treasury ()
With your permission, Mr Speaker, I will make a statement on the
steps His Majesty’s Government have taken to limit risks to our
tech and life sciences sector.
Following the rapid deterioration of Silicon Valley Bank, and
working in concert with the Bank of England, early this morning
we facilitated the purchase of the UK subsidiary of Silicon
Valley Bank by HSBC. Serving 39 million customers globally, and
headquartered and listed here in the UK, HSBC is Europe’s largest
bank. Those affected are now secure in the knowledge that their
deposits are protected and that they can bank as normal.
Customers should not notice any changes, while the wider UK
banking system remains safe, sound and well capitalised.
Using stabilisation powers granted by the Banking Act 2009, which
afforded us the ability to safely manage the failure of banks, we
have forestalled disruption in the tech sector and supported
confidence in the UK financial system. The resolution action was
taken by the Bank of England in consultation with HM Treasury,
using its powers to transfer the UK business of SVB to a private
sector purchaser. As required by the Act, the Bank of England
consulted the Treasury, the Prudential Regulation Authority and
the Financial Conduct Authority on its assessment that all
required conditions for that transaction had been met.
We have been able to achieve this outcome—the best possible
outcome—in short order without any taxpayer money or Government
guarantees. There has been no bail-out, and the actions taken are
a win for customers, taxpayers and the banking system. The
transfer of SVB UK to a buyer has allowed the Treasury to limit
the risk to public funds by ensuring that shareholders and
creditors, rather than depositors, bear losses. To help achieve
that result, the Bank of England has made a related instrument
bringing about a mandatory reduction of capital instruments in
SVB UK, restoring it to viability. It is my view that in this
situation, the system worked as we would hope.
In order to ensure that the sale could proceed, the Government
are using their powers under the Banking Act to provide HSBC with
an exception to certain ringfencing requirements. That was
crucial to ensuring that a successful transaction could be
executed, that the bank has the liquidity it needs, and that
deposits and public funds are protected.
The outcome will provide security for some of the UK’s most
innovative, fast-growing firms. The UK’s tech and life sciences
sectors are world leading, hundreds of thousands of people are
employed in them, and they make a very substantial contribution
to the economy as a whole. My right hon. Friends the Prime
Minister and the Chancellor have been clear throughout that we
will look after our high-tech sectors, and that is what we have
done. The Bank of England has confirmed that, as a result of the
swift, decisive action we have taken, depositors will be able to
access their accounts. It is worth reiterating that, as the
Governor has said, the wider UK banking system remains safe,
sound and well capitalised.
In concluding, I place on record my sincere thanks to my fellow
Ministers across Whitehall, to officials at the Treasury and to
regulators. They worked tirelessly through the weekend to grip
the situation, to deliver this solution and to prevent real
jeopardy to hundreds of the UK’s most innovative companies.
Mr Speaker
I call the shadow Minister.
5.00pm
(Hampstead and Kilburn)
(Lab)
I thank the Minister for giving me advance sight of his statement
today. Labour welcomes the announcement by HSBC that it will be
buying the UK arm of Silicon Valley Bank, or SVB UK, in a rescue
deal. As the shadow Chancellor, my right hon. Friend the Member
for Leeds West (), said over the weekend, the
UK life sciences and tech sectors play an indispensable role in
driving growth and innovation across the economy.
Now that those who bank with SVB UK have some certainty, the
Government should examine how we got here in the first place. For
example, when SVB UK was granted a separate banking licence last
year, what assessment did the Treasury and Bank of England make
of the significant liquidity risks arising from its deposit base
being a small number of high-value corporate deposits?
The effects of the collapse of SVB are still being felt across
the UK market and the Minister said in his statement that HSBC’s
purchase of SVB has “supported confidence” in the UK financial
system. What assessment has he made of the fact that London’s
FTSE 100 was down today, while the UK bank index fell by almost
5% this morning and by more than 10% over the weekend? What will
the disruptions in the banking sector mean for confidence, the
wider economy and the ability of high-growth companies to access
the credit that they need to thrive?
The Minister also said that disruption in the tech sector has
been “forestalled”, but what reassurance can he provide today
that, under HSBC’s ownership, the bank will continue to be able
to support early-stage tech and life sciences businesses in the
UK? He also said that HSBC has been given an exemption from
certain ring-fencing requirements. Will that be a permanent
exemption?
Perhaps the most important question, I am sure the Minister will
agree, is this: how can we avoid this happening again? With
inflation at record levels, the Bank of England has had to take
steps to tackle rising prices, but Ministers must make an
assessment of the risk that sharp changes to UK interest rates
might pose to our financial system. It is time for the Government
to launch a systemic review of the risks that sharply rising
interest rates pose to the UK financial sector, and I hope the
Chancellor will return to the House having made that
assessment.
Finally, the events of this weekend further underline the
importance of ensuring that UK start-ups have access to the
patient capital that they need to grow, as proposed by the Labour
party’s start-up review. I hope that the Minister will return to
the House soon to update us with a broader assessment of the
risks to the financial sector arising from sharply increasing
rates, and with a plan to address the longer-term problems
holding back growth and the provision of patient capital to our
growing businesses.
I think concealed within that was grudging support, and I am sure
that the hon. Lady would like to add her voice to those of so
many in the sector who have welcomed this announcement today,
which provides the important confidence and stability that are
needed. She raised the point that SVB UK has a separate banking
licence, and it is precisely because of that mechanism that our
regulators and the Treasury have been able to take the action we
have taken over the weekend.
I think the hon. Lady understands the disruption and volatility
in the sector, but she should be reassured that the Governor of
the Bank of England has confirmed that this is not indicative of
systemic risk. I can confirm that, in order that the Silicon
Valley Bank, now within HSBC, can provide the broad range of
services that our life sciences and tech sector value so much,
the exemption from the ring-fencing requirements will be
permanent.
The hon. Lady asked about a systemic review. Of course, these are
always opportunities for us to learn and look again, but, as I
said in my opening remarks, the system has worked as
intended.
Finally, and with the greatest of respect, we on the Conservative
side of the House need no lessons on patient capital. We are
unlocking capital for our important tech and life sciences. Only
last week, the Under-Secretary of State for Pensions, my hon.
Friend the Member for Sevenoaks (), brought to this House
regulations to remove the charge cap and to allow our pension
funds to invest in some of the fastest-growing sectors of our
economy.
Mr Speaker
I call the Chair of the Treasury Committee.
(West Worcestershire)
(Con)
May I put on the record my gratitude to the Minister, his
colleagues and officials, and to people at the Bank and in the
City in general, who have obviously worked flat out all weekend
to deliver what turns out to be the best possible outcome in
these difficult circumstances?
On the importance of the sector to the UK economy, did the
Minister and the Bank treat this situation any differently
because of the sector in which SVB was operating, or would they
have tried for the same sort of solution for a bank in any
sector? Was the Minister as concerned as I was about reports that
investors required the firms that they were funding to put money
into the bank as a condition for investment? Finally, given that
other banks have collapsed in the US—other small banks, including
one that specialised in crypto—does he think that crypto is in
any way contributing to financial instability?
I thank my hon. Friend, one of my predecessors and the Chair of
the Select Committee, for her support and comments. The degree of
concentration in a particular sector is unusual—it was an unusual
feature. The business model of Silicon Valley Bank in the UK was
different from that in the US, partly because of the tight
regulations that we have here. For that reason, I have not seen
any evidence that the banking of crypto-asset companies was
something that contributed. Rather, once the Fed had taken its
action, we saw the impact on the bank here. That is why it was
right for the Bank to act to give us the space to protect that
bank and to achieve the outcome that we announced this
morning.
Mr Speaker
I call the SNP spokesperson.
(Dundee East) (SNP)
One of the key lessons of the 2008-09 financial crash was that
the conduct of business and liquidity issues could very quickly
morph into systemic risk with contagion across a variety of
transmission channels, so I very much welcome the speedy way in
which the SVB UK issue was resolved over the weekend. However,
that bank’s business model—and it is not alone—involved it
holding a large number of low-interest-bearing bonds at a time of
rising bond yields. It was required to sell those at a loss,
which exacerbated the liquidity problems that it had. Would it
not be prudent now to ensure that our regulators have another
look at UK banks to ensure that comparable low-interest-bearing
assets are stringently priced and marked to market to ensure that
tier 1 capital is just that, and of sufficient quantity and
quality that any liquidity problem does not morph into an
insolvency and system risk problem?
I thank the right hon. Gentleman for his recognition of the speed
and decisiveness with which the whole Government have come
together, worked together and acted to deliver this outcome—that
is kind of him and it is appreciated. If I may, we should not
conflate some of what we read about the balance sheet in the US
with the regulated balance sheet in the UK, which was a
separately regulated balance sheet. Again, on the business model
in the UK and the backing, and the bonds and collateral that were
being held, I am not aware that their forced sale, and the losses
on it, were a contributory factor. The reality is that we saw a
withdrawal of deposits. The Bank had the ability, because of the
relatively ringfenced balance sheet, to protect the bank and take
the necessary action. Had the Bank not done so, we could have
been in a very different situation, so we were right to act as we
did.
Mr Speaker
I call the Chair of the Science and Technology Committee.
(Tunbridge Wells) (Con)
I strongly welcome the decisive intervention that has been
described, which has saved many UK tech businesses and jobs. Will
my hon. Friend consider how the responsiveness of UK regulation,
which was demonstrated overnight, combined with the strength of
the City of London and our tech sector, provides an opportunity
to attract more businesses to do their financing in the UK and
means that they do not need to go overseas to get the financing
that they require to start up and grow?
My right hon. Friend, who does such good work for the science and
technology community through his Committee, is absolutely right.
The technology and life sciences sectors want our Government to
be joined up and decisive, and to remove unnecessary regulations,
while still operating in a high-quality regulated environment. We
now have the opportunity to go a lot further—to deliver the
Edinburgh reforms and to combine our aspirations to be a science
superpower with the ferocious financing strength that we have
here in the United Kingdom.
Dame (Wallasey) (Lab)
I commend the quick and effective action. However, although the
collapse of SVB in America was partly due to liquidity issues,
there is also the issue of the changes that were made to the
threshold at which banks are considered systemically risky, which
increased from $50 billion to $250 billion. That meant that SVB
could continue in America without the very focused regulation
that might have spotted this problem earlier. Does the Minister
think that the Edinburgh reforms present any similar risks, and
will he say a little about the exemption from ringfencing that he
announced today for HSBC? Is he content that that does not
present any risks either?
I must be very careful not to comment on matters as they relate
to the United States. SVB UK was a separate bank. It was
regulated here, and it was as a result of that regulation, and
the fact that we have taken back control of our financial
regulatory rulebook, that we were able to act so decisively. The
hon. Lady will forgive me if I do not talk about matters in the
United States.
In respect of ringfencing, it was the view of the Bank of England
and the Treasury, in the circumstances and to protect public
funds, that to provide a permanent exemption for what is a very
small part of the much larger HSBC—I think less than 1% of its
pro forma clients on an enlarged basis will be former Silicon
Valley Bank clients—was appropriate. I do not think it puts
inappropriate levels of risk in the system. By streamlining the
rulebook, and by bringing back control and dispensing it to UK
regulators, with accountability to Parliament—she will know about
that through her membership of the Treasury Committee—I think we
can have better regulation and deliver better outcomes for the
sector.
Dame (South Northamptonshire)
(Con)
I congratulate my hon. Friend and all who were involved in the
rescue. It was vital that we acted urgently to prevent the fear
and the risk of contagion that were apparent over the weekend.
Does he feel that the fact that SVB UK was a separately
ringfenced bank and that ringfencing is a UK-specific regulation
brought to bear any protection for SVB UK? He will recall only
too well, as I do, that Lehman sucked capital out of the UK when
it was in dire straits, which to a large extent caused the
ultimate contagion. Will ringfencing continue to protect the UK
banking sector as we go forward, even through the Edinburgh
reforms?
My right hon. Friend speaks with great authority on these
matters, and I can give her that assurance. It was constituted as
a subsidiary in the UK, it had its own separate balance sheet and
it was regulated as such. Because of that fact, the Bank was able
to make the decisive intervention it did. There were assets
within the subsidiary to which we were ultimately able to restore
viability by successfully finding, over the weekend, a very large
bank—Europe’s largest bank—to step in and buy, and to put its
balance sheet behind, this entity.
(Wirral South) (Lab)
While we are all full of admiration, particularly for all our
officials who worked through the weekend to make this happen, I
am afraid I find the statement a bit long on self-congratulation
and a bit short on explanation. What questions has the Minister
asked about why this happened? Why were all these companies
banking with this particular bank and what cultural aspects were
there to the case? What do we need to uncover that will be
important for the sustainability of both banking and
technological firms in the future?
It is not uncommon for banks to have a particular specialism.
Labour Members have worked to bring forward regulations that will
help us have more credit unions, which tend to have a
geographical concentration, and there are agricultural banks and
other wholesale banks, so it is not of itself an unusual feature.
In this case, we were able to take action precisely because of
the UK regulatory structures and the interventions we can make.
We will learn any lessons, but this is a Government who are on
the side of technology companies and the life sciences, and we
have been proud to deliver this outcome—this important
certainty—and to remove the jeopardy they otherwise faced at the
opening of business this morning.
(New Forest West) (Con)
What estimate had the Bank of England made of the health of SVB
before the events of the weekend?
It would not be right for me to answer on behalf of the Bank of
England, if my right hon. Friend will forgive me. We have an
independent regulator that looks at these matters. The Treasury
Committee regularly takes evidence from the Bank of England, and
I am sure it will do so in future.
(East Antrim) (DUP)
I am sure that many firms across the United Kingdom will welcome,
and breathe a sigh of relief at, the decision that was made over
the weekend. However, this was done in haste. I ask the Minister:
what kind of due diligence was done by HSBC when arranging this
takeover, and is he sure that we are not walking into a situation
similar to what we had with Lloyds and HBOS in 2008, when a quick
decision led to a domino effect in the banking system and
resulted in bail-outs by the taxpayer?
I cannot speak for the due diligence that was done for HSBC, but
it has got itself comfortable with it. We should also understand
the relative scale of HSBC, which is an extraordinarily
well-regulated, global and diverse bank. My understanding is that
if we add all of the important clients of Silicon Valley Bank UK,
which we had in the front of our mind as we sought to act over
the weekend—if I may say so, we make no apology for acting in
haste, because haste was absolutely the required procedure in
this particular case—they would in their entirety be less than 1%
of the overall client base of HSBC. With respect, I do not think
that was the case in the examples to which the right hon. Member
referred.
(South Cambridgeshire)
(Con)
The sighs of relief across South Cambridgeshire this morning were
so loud that they were almost deafening. Dozens of my technology
companies, which had been in contact with me over the weekend,
thought they were going to be wiped out this morning, but they
can now operate as normal because of the decisive action by the
Government. I very much congratulate the Minister, the Bank of
England and the Treasury on that action.
I have also had questions about whether this is a sign that all
the reforms of the financial system in the wake of the global
financial crisis have failed or are failing. Does my hon. Friend
the Minister agree that this is not a sign of the reforms
failing, but a sign that they are working, and that without the
reforms we would not be able to do a rescue in this way? Can he
also confirm that the reforms that are coming through—the
Edinburgh reforms—will not make future collapses more likely, or
future rescues more difficult?
My hon. Friend knows a great deal about the sector, and it is due
to past reforms that we were able to take this decisive action.
Parliament has given—in extremis, and with the agreement of the
Bank of England, the PRA, the FCA and the Treasury—sweeping
powers to enable this sort of transaction to happen at great
pace. Let me be clear that it is the shareholders and creditors
of the bank, not depositors or the taxpayer, who have lost. In
the system that we have, that is the right outcome, and I am
pleased we were able to achieve it.
The Edinburgh reforms are designed to give this country the
ability to continue to grow and to be internationally competitive
with other markets, while adhering to the highest quality
regulatory standards, and with the UK at the absolute cornerstone
of organisations such as the Financial Stability Board. They will
not put any more jeopardy into the financial system. Indeed,
having good healthy businesses that grow and are profitable is
the best way to avoid jeopardy.
(Liverpool, Wavertree)
(Lab)
First pension funds and liability driven investments, now the
collapse of SVB UK. Is it not time for a systematic review of the
risks that sharply rising interest rates pose to the UK financial
sector?
With the greatest of respect to the hon. Lady, the issue here was
a subsidiary of a US bank, and I will not be commenting on US
policy, interest rates or anything else from this Dispatch Box.
The important fact is that we were able to restore the bank to
viability and, over a small number of hours and days, to find a
successful buyer. We did that because of the strength of the UK
regulatory system, and because of the conviction of this Prime
Minister and this Chancellor that this is a critical sector, and
one of the ways that we will continue to grow the UK economy.
(Devizes) (Con)
I pay tribute to the exemplary orchestration of all the different
stakeholders and decision makers that the Minister led over the
weekend. It is helpful to distinguish between decisions taken by
the American Government and by ours in respect of this bank. The
American taxpayer is guaranteeing the deposits of SVB account
holders there; in our case, another bank has bought them and the
taxpayer is safe. I pay tribute to the Government for that. I
appreciate that the Minister cannot comment on American policy,
but in the hypothetical instance of another bank in the UK
failing, or another sector getting into trouble, will he give an
indication of his thinking on whether the taxpayer would ever
need to step in? Will he guarantee that that will not happen?
I am not going to offer my hon. Friend that guarantee, as that
would not be prudent or the right thing to do. I can guarantee
that this Government will do everything possible to reconcile the
needs of protecting customers, protecting financial stability and
protecting the taxpayer. It is of great note that we were able to
do that in this transaction, and if such an issue were ever
unfortunately to reoccur, all our energy would be devoted to
precisely the same ends.
(Richmond Park) (LD)
I very much welcome the purchase of Silicon Valley Bank UK by
HSBC this morning, not least because I am a former employee of a
company that had exposure to the bank on both sides of the
Atlantic and whose chief executive officer was one of the
signatories to the letter sent to the Chancellor on Saturday.
Statements were made by the UK bank on Thursday and Friday, and
if depositors had relied on the assertions made in those
statements, and if the purchase had not gone through this
morning, those depositors would have incurred losses. Will the
Minister confirm whether that constitutes a breach of the
regulations? If it does, will there be any sanctions for people
identified as having committed those breaches?
I am delighted that the hon. Lady’s constituents benefit from the
certainty. It was a terrible weekend for everybody who was a
depositor or who was in some way dependent on SVB UK. That is why
it was so important that we not just achieved this outcome and
that the regulatory structure and laws laid down by Parliament
allowed us to do so, but that we were able to act decisively. I
welcome the fact that another great British bank, HSBC, has
stepped in, and I wish it and all the employees well.
It would be inappropriate for me to comment on particular things
that were said. Fortunately, we are in the position that every
depositor has been made whole, and therefore that issue does not
arise.
(Chelmsford) (Con)
I massively congratulate my hon. Friend and His Majesty’s
Government on this news. I spent three years of my life pushing
the post-crash banking recovery and resolution frameworks through
Europe, so I can absolutely confirm that the fact that there are
now powers in so many countries to rapidly resolve failing banks
without the need for taxpayers’ money is in very large part due
to the outstanding global leadership of the post-crash
Conservative UK Government and the actions of the now Governor of
the Bank of England. Can my hon. Friend confirm that going
forward, the Government will ensure that our financial services
regulators not only work to reduce systemic risk, but back our
financial services sector in its efforts to invest in our country
and help our economy grow?
I can absolutely give my right hon. Friend that assurance. In
doing so, let me also pay tribute to her work as a Member of the
European Parliament between 2009 and 2017, when she led on
banking reform.
(Aberavon) (Lab)
The Minister said that SVB UK was a subsidiary of the American
bank, but in this country a separate banking licence was given to
SVB UK. May I therefore push him on the risk assessment around
liquidity? When the banking licence was given, what risk
assessment was conducted, particularly given the concentration of
a small number of corporates in the deposits to SVB UK?
That is, with respect, the whole point: it was a separate
subsidiary. It did have a separate banking licence here and it
did participate in the regulators’ stress tests here. There is
risk in any financial system. What this House and our diligent
regulators are focused on is achieving the right balance of risk.
From time to time there will—as there was with the failure of the
bank in the US—be factors that lead to challenges in any
risk-based system, notwithstanding the good work by the
regulators and the stress tests having been applied.
(North East Bedfordshire)
(Con)
I draw the attention of the House to my historical entries in the
Register of Members’ Financial Interests as an adviser to a
technology venture fund and as a board member of a number of
portfolio companies, many of which will have had financing
arrangements with Silicon Valley Bank, HSBC and other financial
institutions.
On behalf of the technology businesses in Bedfordshire, I add my
thanks to the Minister and his team for their swift response over
the weekend. He will be aware, however, of general concerns about
global liquidity for the technology sector. What is his
assessment of how the SVB experience at home and abroad may
exacerbate those and test the resilience of the UK tech sector?
Although HSBC is a great bank—indeed, I am a customer of
HSBC—Silicon Valley Bank succeeded over many years precisely
because it was so closely attenuated to the needs of early stage
and growth stage businesses. Will my hon. Friend consider what
steps he can take to encourage the emergence of new challenger
banks to repeat the successes and avoid the failures of SVB in
the UK?
As my hon. Friend knows, the Government are seeking to support
challenger banks to make sure we have a vibrant and competitive
sector. That includes looking at issues such as the level of
MREL—minimum requirement for own funds and eligible
liabilities—and making sure that we have proportionate banking
regulation that is relevant to the risk involved. He makes
important points about the culture and capabilities of SVB UK,
which is why it was so important that we had to very swiftly find
it a home. I have spoken today to the chief executive of HSBC, as
well as to the former chief executive of SVB UK. They are both
enormously excited about the future. They see this as a platform
for mutual growth, taking our brilliant life sciences and
technology businesses international and to a new scale. The
Government will not rest until we have mobilised capital to turn
us into that science superpower.
(Newcastle upon Tyne Central) (Lab)
The Minister said, “The system worked.” Certainly, it was a huge
relief that the estimated 50% of the UK tech sector that banked
with SVB UK could today pay their suppliers and staff. However,
surely that highlights the lack of diversity of capital available
to the UK tech sector, and our dependence on the US. In the last
two years, Silicon Valley Bank’s deposits tripled, but its
exposure to Treasuries, and therefore to interest rate rises,
went up ninefold. Is the Minister seriously saying that no one on
this side of the Atlantic should have noticed that, and that it
had no impact on what happened?
The hon. Member talks about dependence on the US, but if that is
her concern she should welcome this deal wholeheartedly, because
we have taken a former subsidiary of a US business and made it
part of a thriving and successful UK business.
(North West Hampshire) (Con)
I draw attention to my entry in the Register of Members’
Financial Interests.
Bravo to the Minister and, in particular, the resolutions team at
the Bank of England, who have been honing their skills for many
years and finally got the chance to put them to use. Further to
the question from my constituency neighbour, my hon. Friend the
Member for Devizes (), does the Minister
understand the relief felt by many that the taxpayer, once again,
has not been asked to step in and, in effect, nationalise private
sector losses? Does he agree that for a capitalist economy to
function, even in the most painful of circumstances, it has to be
allowed to do what it does best—recycle distressed assets?
My right hon. Friend is quite right to talk about risk and
capital systems’ proficiency at recycling capital to productive
uses. That is also an enormous focus of this Government and is
why our No. 1 priority was to seek to make a private sector
transfer of the bank if we could, to protect the taxpayer while
also protecting customers and the solvency of the financial
system. I am glad that we were able to achieve this outcome. We
will continue to do so by having fit-for-purpose regulations in
this space.
Ms Anum Qaisar (Airdrie and Shotts) (SNP)
Does the Minister agree that the collapse of Silicon Valley Bank
highlights the dangers associated with deregulation in the
banking sector—something that the UK Government have continually
touted as one of the benefits of Brexit?
I do not accept that for one minute. We are only just bringing
forward the deregulation. The Financial Services and Markets Bill
is not even on the statute book. The regulations that affected
this situation are precisely the same regulations that we have
inherited from Brussels.
(Hitchin and Harpenden)
(Con)
It is when we act in haste that we need to think about the
long-term consequences of the regulatory actions taken. I join
others in the House in commending the Treasury, wider Government
and the Bank of England. The Minister said that HSBC has been
given a waiver on certain ringfencing rules. I ask this as
someone who, before arriving at the House, worked at HSBC on
ringfencing in detail and many other things: will the Minister
explain that waiver in more detail? More importantly, will that
waiver on ringfencing apply more widely to other banks caught by
ringfencing regulations?
As my hon. Friend well knows, the Government are undertaking a
review of ringfencing. There is a call for evidence on how we
could reform that, following the work of Sir Keith Skeoch into
how we mesh the ringfencing arrangements put in place back in
2008 with the more modern resolution arrangements. We will learn
the lessons that we can from this but, as I said at the
beginning, in this case we have been able to achieve an outcome
that has protected customers, the taxpayers and the financial
system.
(Cambridge) (Lab)
I, too, had many representations over the weekend from early
stage tech companies in and around Cambridge, and they will be
much relieved by the news today. To echo the point made by the
hon. Member for North East Bedfordshire (), the reason they banked
with SVB was its close understanding of their particular needs.
What guarantee can we have that HSBC will be able to replicate
that?
How this bank is run going forward is a matter for HSBC. However,
HSBC is a prodigiously successful global institution that has
bought SVB on the back of a desire to grow and support that
sector, and it sees that this Government are firmly on the side
of that sector. We see the aspiration and the opportunity now
that we have taken back control from Brussels, and we are going
to make an enormous success out of our tech and life sciences
sectors; we are on their side.
(Harrogate and Knaresborough)
(Con)
I welcome the Minister’s statement, and I congratulate him and
all those who have worked to resolve this matter so quickly. The
collapse of Silicon Valley Bank will have left its customers
worried about managing their cashflows; obviously, cashflow
problems cause the majority of businesses to fail. In his
statement, he mentioned that customers would continue to have
access to their deposits. Will that be seamless and continue
right away, so that business continuity is safeguarded?
I thank my hon. Friend and I again pay tribute to the hardworking
officials from the Treasury and the regulators, and to my
colleagues across Government, who pulled together rapidly to
deliver this solution. There may be teething issues as the
integration takes place, but having spoken to HSBC and the
management of SVB UK, they are open for business today and
serving their clients. That is the outcome that the Prime
Minister and Chancellor were absolutely right to seek in time for
this morning’s opening of business.
(St Albans) (LD)
I would like to press the Minister on his answer to my hon.
Friend the Member for Richmond Park (). At least two tech companies
in my constituency were almost affected; I am grateful to the
Economic Secretary for acknowledging my urgent letters over the
weekend. One of those companies, based in St Albans, moved
£200,000 from its US account to its UK account based, in part, on
the statements made about SVB being an independent entity,
regulated in the UK—statements that bank made to try to give the
reassurance that it would not be affected. However, it then did
become affected. Will the Minister clarify whether SVB would or
should have known that those statements were either incorrect or
misleading? If he is not prepared to comment on that particular
example, will he commit to a process to look into that issue?
Does he believe that there should be consequences in future for
banks that make incorrect and misleading statements that put
companies at risk?
As I said to the hon. Member for Richmond Park (), I do not think it is
appropriate that I make comments from the Dispatch Box about the
veracity or otherwise of statements made by an individual; I hope
the hon. Lady respects that. It is, of course, right that anyone
in a position of leadership in business takes responsibility and
acts in good faith. Although there may well be lessons to be
learned in time, the important point is that her constituents and
their companies are able to operate, have access to their
deposits and continue to do their work of growing important
sectors of the economy. I hope the whole House will welcome
that.
(Gloucester) (Con)
Congratulations to the Chancellor, the Minister and all those
involved in resolving this problem, which tech companies in
Gloucester and Gloucestershire will greatly appreciate. Does the
Minister agree that this shows the importance of having Europe’s
largest bank, the Hongkong and Shanghai Banking Corporation,
regulated and headquartered here in London, and that this also
shows that this Government will always support business? Lastly,
since the Chancellor extended start-up loans in September, will
my hon. Friend confirm that this Government have effectively
helped create and sustain 33,000 new businesses?
My hon. Friend is absolutely right. Our actions demonstrate that
we are on the side of business. We mean it when we say that we
want to make the UK the best place to start, grow and run a
business, and, I will add, to list a business, because he is
quite right that HSBC is an enormously successful global business
that is headquartered in the UK and proudly listed on the UK
stock exchange.
Dame (Llanelli) (Lab)
In the light of recent events and the risk of contagion, can the
Minister spell out exactly what action he is taking to ensure
that we do not see a contraction in the availability of credit to
these specialist, fast-growing companies? What more will he do to
facilitate access to appropriate credit to help our
groundbreaking tech industries to develop?
It is a core focus for the Government to ensure that our
scaling-up businesses get access not just to credit, but to
capital at every level through their life: the Prime Minister has
made that a core priority. That is why we are bringing forward
many reforms that will open up capital markets to growing
businesses, and it is why we will continue to look at reforming
packets of trapped capital, whether that be in respect of
insurers, through the reform of solvency II, or through looking
again at pension arrangements to make sure that savers and
potential future pensioners can benefit from the wonderful
opportunities from emerging businesses in the tech and life
sciences sector.
(Boston and Skegness)
(Con)
If SVB UK had not been bought, there would have been a huge
impact on the most high-tech jobs in our economy, and indeed on
the jobs of the future. I pay tribute to the Minister, the whole
Government and the Bank of England for their work over the
weekend. I also thank the Minister for engaging with me. Does he
agree that because of the outsize impact that the failure of SVB
might have had, it is all the more important that the Government
look at what made SVB so appealing to these vital jobs and at how
we do more of it where it is right and less if it is
dangerous?
I completely agree. My hon. Friend knows a great deal about the
subject, which reflects his background; he is absolutely
right.
(Strangford) (DUP)
I thank the Minister for his statement. The Government are to be
commended for the speed with which they have acted; it is indeed
good news. I very much welcome the purchase of SVB by HSBC, which
looks set to protect UK investors and start-ups alike, but what
further assurances can the Minister give this House about what
the 3,500 British customers will receive in terms of the
long-term plan? How long is the Government’s commitment to
steadying the ship?
The Government are always committed to steadying the ship. That
is why we take a prudent approach to running the economy and why
the Prime Minister’s priorities are to reduce inflation, to pay
down debt and to grow. To grow requires capital. That is why we
have a long-term commitment to good regulation, which will
minimise the prospect of events like this happening again. It is
also why, with the expertise on the Government Benches, we are so
focused on ensuring that we have the right ecosystem to allow our
brilliant entrepreneurs, our scientists and our innovators the
fertile capital with which to grow to their potential.
Mr (Old Bexley and Sidcup)
(Con)
For transparency, I draw hon. Members’ attention to my former
career in the City, as per my entry in the Register of Members’
Financial Interests. I welcome the swift and decisive action by
His Majesty’s Government in solving this issue and in reducing
the risk of potential contagion to the wider economy. Will my
hon. Friend ensure that sufficient regulatory work is taking
place to stress-test the liquidity of UK banks and the Government
bond markets, given the clear risk highlighted by this case and
by the leverage in recent liability-driven investment cases?
Yes, I can give my hon. Friend and the House that commitment. We
will learn lessons if there are lessons that need to be learned,
but we should not look past the fact that today we have protected
customers, protected the taxpayer and protected the security of
the financial system. That is so important to our businesses.
Many, many people will go home from work today much more
confident, with the jeopardy of the weekend having been removed
as a result of the decisive action that this Government have
taken.
Mr Deputy Speaker ( )
I thank the Minister for his statement and for responding to
questions for more than three quarters of an hour.
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