There was a collective sigh of relief at the weekend when it emerged that companies that had deposits with Silicon Valley Bank would be able to access them on Monday.
There had been concerns over whether companies would be able to continue to do business if they were cut off from their funds while regulators in the US sorted out what funds were covered by the US deposit insurance scheme and what deposits weren’t. Those who hadn’t acted quickly enough to shift their money elsewhere were being left in limbo. In Ireland, industry experts estimated that fewer than 100 companies had exposure to SVB either through deposits or funding.
But on Sunday evening US financial authorities announced measures to guarantee money held in accounts at the bank. The bank’s UK subsidiary was sold to HSBC on Monday for £1, after the British government and the Bank of England facilitated a private sale of the UK arm to protect deposits without taxpayer support.
That gave companies immediate access to funds – including many of the Irish companies who did business with the bank – and the sense of security from being part of one of Europe’s biggest banks, for whatever value that has these days.
But it’s not over yet. While tech companies will have access to their deposits, there has been other fallout from the collapse of SVB. There’s the further shaken confidence in the system, when such confidence had already taken more than a few knocks in recent years. There’s also the loss of a bank that was known to be start-up friendly. And while industry leaders were sanguine about the impact on Ireland’s funding landscape, the loss of any tech-friendly entity willing to fund early-stage companies will inevitably have a chilling effect on sentiment.
Throw in the ripple effect has already hit Signature bank, and roiled the banking sector in Europe and the US, and it’s clear the coming weeks may see yet more repercussions.
