As the SVB auction continues, the sale of its UK arm bounces between potential suitors

Update: HSBC is now buying SVB UK. Full story here. Earlier story continues below.

In the U.S. today, The Federal Deposit Insurance Corp. continued the auction process for the beleaguered Silicon Valley Bank, with final bids due by Sunday afternoon, according to Bloomberg.

Any agreed sale may not be known until late Sunday, if at all. It’s still possible that no deal will be reached and the bank will become insolvent. SVB had more than $175 billion in deposits and $209 billion in total assets. The FDIC is reportedly attempting to make at least a portion of clients’ uninsured deposits available from Monday.

U.S. Treasury Secretary Janet Yellen said on Sunday that the government would not bail out Silicon Valley Bank with public money, but added it was concerned about depositors -- the vast majority being tech companies -- reeling from what is the worst bank failure since the 2008 financial crisis. As TechCrunch reported earlier the Silicon Valley Bank crisis also has implications for firms thousands of miles away. For example, over 60 YC-backed Indian startups have more than $250,000 stuck in accounts with SVB.

And that's just the tip of the overseas iceberg.

Across the Atlantic, after a frantic weekend involving regulators and the U.K. government, Silicon Valley Bank UK Limited (SVB UK) — which is a legally separate company to SVB in the U.S. — is expected to enter an insolvency procedure this evening (Sunday 12 March 2023) as we reported yesterday. The move was confirmed today by London law firm Osborne Clarke.

This means customers of SVB UK would be unable to withdraw, or deposit into the bank, creating huge liquidity issues for many depositors and/or borrowers, leaving many tech startups unable to execute crucial actions such as paying staff.

U.K. tech entrepreneurs and VCs spent the weekend lobbying the government to intervene and provide either support for affected depositors and/or borrowers or shepherd a sale of the bank.

On Sunday morning the U.K. government was drawing up plans for some kind of emergency cash lifeline for tech firms.

Chancellor Jeremy Hunt told Sky News: “We will bring forward, very soon, plans to make sure people are able to meet their cashflow requirements and pay their staff but obviously what we want to do is to find a longer-term solution that minimises, or even avoids completely, losses to some of our most promising companies.”

In a statement, the chancellor warned the sector was at “serious risk” and a “high priority” for the government, announcing that it was “treating this issue as a high priority” and “working at pace on a solution to avoid or minimise damage to some of our most promising companies in the UK.”

Sources told TechCrunch that this could come in the form of a “bounce-back loan approach” where tech clients of SVB UK could borrow from a major U.K. bank, with the State acting as a guarantor.