Amendments of the Law (Resolution of Silicon Valley Bank UK Limited) Order 2023

Tulip Siddiq Excerpts

Monday 27th March 2023 General Committees

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

It is a pleasure to serve with you in the Chair, Mr Hollobone.

The Labour party welcomes the quick work done by the Treasury, the Bank of England and regulators to secure the HSBC rescue deal for the UK arm of Silicon Valley Bank. SVB UK serves a high concentration of life science and tech companies in this country. As the Minister said, those firms play an indispensable role in driving growth and innovation across the economy. That is why we will give our full support to the statutory instrument.

I have a number of questions about the detail of the measure, including on where it sits in the Government’s wider strategy for financial stability. In the US, we saw that SVB made financial decisions based on an assumption that interest rates would remain low for some time. That contributed to its failure. We have also seen difficulties in other banks, such as Credit Suisse. How is the Minister working with the Bank of England, regulators and national partners to review the impact of interest rate rises and wider uncertainty on our financial system? What steps is he taking to mitigate risks?

As the Minister set out, under the SI, HSBC has been given an exemption from certain ringfencing requirements so that it can provide preferential intra-group lending or funding to SVB UK. Will he set out in further detail the background to and justification for that decision, as well as the Government’s announced intention to permit SVB UK to remain exempt from the ringfencing rules beyond the four-year transition period? Of course, we recognise the circumstances that SVB UK is in but, as he knows, ringfencing reforms were introduced for good reason: to protect savers and taxpayers from a banking crisis. I need reassurance from him that, contrary to what has been suggested, the Government do not propose any further tinkering with the ringfencing regime beyond this measure for SVB UK.

I wanted to bring up the risks to start-ups. The risk that the collapse of SVB poses to the tech sector underlines the importance of ensuring that UK start-ups have access to a deep and diverse pool of capital. What reassurance can the Minister provide that under HSBC’s ownership, SVB UK will continue to be able to support early-stage tech and life-science businesses in the UK? Beyond that, what will the Government do to ensure that start-ups have access to a wide pool of patient capital?

As I set out, we support the SI, which helps to protect the health of SVB UK and the tech sector that it supports, but I would like reassurance from the Minister on my concerns.