India, Israel and the United Kingdom look for ways to protect their companies from the SVB crisis – 03/12/2023 – Market

This Sunday (12), the governments of the United Kingdom, India and Israel announced that they are studying measures to contain the damage generated by the collapse of the SVB (Silicon Valley Bank).

SVB collapsed on Friday (10) after customers, concerned about the bank’s financial health, began to withdraw their deposits. The move has led to a loss of more than $100 billion in market value by US banks in recent days.

There is an expectation that the US government will announce a weighty measure this Sunday, to avoid greater problems in reopening the markets, on Monday (13).

In the UK, where the SVB has a local subsidiary, Chancellor of the Exchequer Jeremy Hunt said he was working with Prime Minister Rishi Sunak and the BoE (Bank of England) to prevent and reduce damage.

“Very soon we will come up with plans to make sure people are able to get cash flow to pay their staff,” Hunt told Sky News.

More than 250 British technology companies signed a letter on Saturday calling for government action on the issue.

Consultancy Rothschild & Co is exploring options for Silicon Valley Bank UK Limited, according to people close to the case heard by Reuters. The BoE has said it plans legal action to put SVB’s UK branch into insolvency proceedings.

In Israel, the technology sector is one of the main drivers of the economy and has strong ties with Silicon Valley. Companies of Israeli origin such as Compugen, Nextvision and Qualitau said they have funds in the SVB, but in relatively low amounts, up to US$ 20 million each.

Prime Minister Binyamin Netanyahu has promised to help local companies that are struggling with the crisis. “We have an obligation to try to protect these companies, whose main operations are in Israel, and their employees,” he said, in a meeting with ministers.

“We are examining the case closely and monitoring both the immediate fallout and those that may come in later waves,” said Yair Avidan, a bank supervisor at the Bank of Israel.

The country created an inter-ministerial team to monitor the case and develop responses to the crisis. The Tel Aviv Stock Exchange (TASE) fell 4% on Sunday.

In India, the Minister of Technology promised to talk to businessmen about the crisis. “I will be meeting with Indian startups to understand the impact on them and how the government can help during the crisis,” Rajeev Chandrasekhar, the technology minister, wrote on Twitter.

India has one of the largest startup markets in the world, with many companies valued in the billions of dollars receiving massive foreign funding.

“Especially for Indian founders, who set up companies in the US and raised their initial rounds there, SVB was the default bank. Uncertainty is killing them. [empresas] developed countries are relatively safe as they diversify,” said Ashish Dave, president of Mirae Asset Venture Investments.

On Sunday, US Treasury Secretary Janet Yellen said she was working on the issue, but ruled out a major bailout. “During the financial crisis [de 2008]there were investors and big banks that were bailed out, and the reforms that were made mean we’re not going to do that again,” he told CBS.

“But we are concerned with account holders and focused on trying to meet their needs”, he added, without detailing how far this help can go.