Silicon Valley Bank

Lord Grantchester Excerpts

Tuesday 14th March 2023 Lords Chamber

[Baroness Penn (Con)]

On the noble Baroness’s final point, I do not think that those two aims need to contradict each other. In fact, the Financial Services and Markets Bill aims to deliver on both. I emphasise to the House the importance of a healthy financial services sector to growing our economy in all parts of our country. I point out to the noble Baroness that no one has said that the events over the weekend have brought into question the UK’s prudential regulatory regime and the protections we have put in place.

However, the point made by the noble Lord, Lord Fox, about the changing context and being able to remain dynamic in our assessment of the risks and, therefore, in looking at how our system works, is absolutely right. The world changes very quickly and there is absolutely no room for complacency here. But do I think that the reforms we are proposing in the Bill are right? Do I think they will both promote growth in the UK and protect the safety and soundness of our system? I do, and we will continue to strike that balance as we take our reforms forward.

[Lord Grantchester (Lab)]

Although the main reason for Silicon Valley Bank’s collapse may be its poor handling of the bond market, whether or not augmented by aggressive raising of interest rates by the Fed in the US and turbulence from the Truss era in London, nevertheless, the fact that the bank’s business was focused on new technology and innovation has raised some alarm. Can the Minister give the House an assurance that the technology sector, with its own stresses, has been protected by the transfer to the safe haven of HSBC, and that the drive to net zero and the raising of finance for that imperative has not been impeded in any way?

[Baroness Penn (Con)]

I can absolutely reassure the House that all depositors’ money with SVB UK is safe and secure as a result of the transaction. The noble Lord is right that many of SVB UK’s customers represented large parts of the tech sector in the UK. Part of the success of securing that sale means that they can continue with their business and with investing in innovative solutions to challenges such as net zero, confident that their banking services remain in place.