Chancellor Jeremy Hunt has warned of a ‘serious risk’ to the UK’s life science and tech sector following the collapse of Silicon Valley Bank (SVB).

Speaking on Sunday to Sky’s Sophie Ridge he said the government was ‘working at pace on a solution’ and he and PM Rishi Sunak had discussed the unfolding crisis over the weekend with Bank of England governor Andrew Bailey.

The problem was triggered by the problems SVB UK’s parent bank in the US began experiencing last week.

On Friday it was announced that regulators had stepped in to take over the stricken California-based SVB.

At the time Silicon Valley Bank UK issued its own statement stressing it was as ‘standalone independent UK regulated bank’ but it’s since been confirmed that it’s set to enter insolvency on Sunday.

Economic secretary to the Treasury, Andrew Griffiths MP, retweeted a Treasury statement on Sunday morning saying: “The government is working at pace on a solution to avoid or minimise damage to some of the most promising companies in the UK and will bring forward immediate plans to ensure the short-term operational and cashflow needs of SVB UK’s customers are able to be met.”

Silicon Valley Bank UK specialises in backing technology, life science and healthcare companies, which is why the collapse has caused such a shockwave in these sectors.

The Bank of England issued a statement to say it intends to apply to the court to place Silicon Valley Bank UK into a ‘bank insolvency procedure’, under which eligible depositors are paid out by the FSCS as quickly as possible up to the protected limit of £85,000 or up to £170,000 for joint accounts.

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The statement continued: “SVBUK’s other assets and liabilities would be managed in the insolvency by the bank liquidators and recoveries distributed to its creditors. SVBUK has a limited presence in the UK and no critical functions.”

Silicon Valley Bank UK issued the following statement on its website: “We are announcing that following conversations with the Prudential Regulation Authority there is an intention, barring any intervening event, to put Silicon Valley Bank UK Limited into insolvency from Sunday evening.

“We are determined to work on the behalf of our clients and are proud of our employees in their engagement with you. If clients have any questions please get in touch with us and we will try our best to answer any and all of your queries.”

A Treasury statement said: “The government and the Bank (of England) understand the level of concern that this raises for customers of Silicon Valley Bank UK, and especially how it may impact on cashflow positions in the short-term.

“The UK has a world leading tech sector, with a dynamic start-up and scale-up ecosystem. The government recognises that, given the importance of Silicon Valley Bank to its customers, its failure could have a significant impact on the liquidity of the tech ecosystem.

“The government is treating this issue as a high priority, with discussions between the Governor of the Bank of England, the Prime Minister and the Chancellor taking place over the weekend.”

In other news Atomico, which partners with Europe’s most ambitious technology founders, sent a joint statement from a number of leading UK venture capital funds, to Jeremy Hunt and the Treasury, in support of Silicon Valley Bank UK.

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The statement, which has been signed by the likes of Accel, Firstminute Capital, Index Ventures, Entrepreneur First and Cherry Ventures, said: “SVB-UK is a trusted and valued partner of the entire innovation ecosystem, powering founders and the venture capital industry.

“It plays a pivotal role in supporting and financing Britain’s startups. In the event that SVB-UK were to be purchased and appropriately capitalised, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them.”