Silicon Valley Bank

Tulip Siddiq Excerpts

Monday 13th March 2023 Commons Chamber

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I thank the Minister for giving me advance sight of his statement today. Labour welcomes the announcement by HSBC that it will be buying the UK arm of Silicon Valley Bank, or SVB UK, in a rescue deal. As the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), said over the weekend, the UK life sciences and tech sectors play an indispensable role in driving growth and innovation across the economy.

Now that those who bank with SVB UK have some certainty, the Government should examine how we got here in the first place. For example, when SVB UK was granted a separate banking licence last year, what assessment did the Treasury and Bank of England make of the significant liquidity risks arising from its deposit base being a small number of high-value corporate deposits?

The effects of the collapse of SVB are still being felt across the UK market and the Minister said in his statement that HSBC’s purchase of SVB has “supported confidence” in the UK financial system. What assessment has he made of the fact that London’s FTSE 100 was down today, while the UK bank index fell by almost 5% this morning and by more than 10% over the weekend? What will the disruptions in the banking sector mean for confidence, the wider economy and the ability of high-growth companies to access the credit that they need to thrive?

The Minister also said that disruption in the tech sector has been “forestalled”, but what reassurance can he provide today that, under HSBC’s ownership, the bank will continue to be able to support early-stage tech and life sciences businesses in the UK? He also said that HSBC has been given an exemption from certain ring-fencing requirements. Will that be a permanent exemption?

Perhaps the most important question, I am sure the Minister will agree, is this: how can we avoid this happening again? With inflation at record levels, the Bank of England has had to take steps to tackle rising prices, but Ministers must make an assessment of the risk that sharp changes to UK interest rates might pose to our financial system. It is time for the Government to launch a systemic review of the risks that sharply rising interest rates pose to the UK financial sector, and I hope the Chancellor will return to the House having made that assessment.

Finally, the events of this weekend further underline the importance of ensuring that UK start-ups have access to the patient capital that they need to grow, as proposed by the Labour party’s start-up review. I hope that the Minister will return to the House soon to update us with a broader assessment of the risks to the financial sector arising from sharply increasing rates, and with a plan to address the longer-term problems holding back growth and the provision of patient capital to our growing businesses.