Global Upheaval Over SVB Bankruptcy: "Monday Crisis Begins"

UK and Canada Also Concerned... Governments Worldwide Must Actively Intervene

[Asia Economy Reporter Oh Su-yeon] The ripple effects of the Silicon Valley Bank (SVB) collapse have begun to spread worldwide. There are calls for governments around the world to intervene actively to prevent further spread.

On the 11th (local time), foreign media such as Bloomberg and AP reported that SVB's UK branch is on the verge of declaring bankruptcy. The SVB UK branch has currently suspended transactions and is not accepting new customers.

Logo at the Silicon Valley Bank headquarters
[Photo by Yonhap News]

About 180 UK information technology (IT) companies sent a letter to UK Chancellor Jeremy Hunt requesting intervention in the SVB collapse. They appealed, "The crisis will begin on Monday, so authorities must stop it now," adding, "Loss of deposits could cause severe damage to the IT sector and set the corporate ecosystem back by 20 years."

Chancellor Hunt discussed the situation with the Governor of the Bank of England on the morning of the same day. The UK Treasury is currently assessing the size of deposits and estimated cash losses among startups. They plan to hold meetings with companies affected by the incident. US President Joe Biden discussed countermeasures with California Governor Gavin Newsom.

Earlier, on the 10th, the California Department of Financial Protection and Innovation closed SVB due to insufficient liquidity and insolvency. Established in 1982, SVB is a major bank in the technology startup sector, serving 44% of US tech and healthcare venture companies as clients.

Warnings have been issued that if governments do not intervene actively, startups could face a wave of bankruptcies. SVB has expanded not only in the UK but also in Canada, China, Denmark, Germany, India, Israel, Sweden, and other countries. Bloomberg reported that this incident may be just the beginning.

Canada is also concerned about the spread of the SVB collapse's impact. SVB's Canadian branch significantly expanded its loan portfolio last year. The loan amount last year was 435 million Canadian dollars (approximately 416 billion KRW), doubling from 212 million dollars the previous year. Toronto-based ad tech developer 'Acquity Ads,' listed on Nasdaq in 2021, requested a trading halt on the 10th. The company has 55 million dollars (approximately 72.7 billion KRW), about 90% of its cash holdings, in SVB.

Asian countries are also busy responding to the aftermath of SVB's collapse. The SVB joint venture in China is assuring customers that it is operating independently and stably.