London Daily

Focus on the big picture.
Saturday, May 31, 2025

Analysis: UK businesses mull moving cash after SVB chaos

Analysis: UK businesses mull moving cash after SVB chaos

British banks are seeing a pick-up in enquiries to switch cash between institutions after the collapse of U.S. tech lender Silicon Valley Bank, as contagion fears prompt some depositors to try to figure out the safest harbours for their funds.

One of the country's biggest lenders, Barclays (BARC.L), told Reuters it had seen an increase in enquiries to switch or open business accounts in the past few days. Virgin Money (VMUK.L), Britain's sixth largest bank, said in a statement it had also seen "net business deposit inflows in recent days".

SVB's failure has roiled global markets over the past week, with contagion concerns spreading to Swiss lender Credit Suisse, forcing the country's central bank to shore up its liquidity on Thursday in a move that brought some respite.

The British government and the Bank of England have said the country's banking system is safe, sound and well capitalised, while the UK arm of SVB was rescued by Europe's largest bank HSBC on Monday. That means SVB UK's customer deposits are safe and their loans supported, HSBC's top bosses have said.

But the collapse of the Californian bank has drawn additional scrutiny of the safety of uninsured deposits above an 85,000 pound guarantee granted to licenced banks in Britain, particularly for businesses, as they are more likely to have larger deposits.

Sam Franklin, CEO of recruitment platform Otta, which has around 70 full-time employees, said the crisis had impacted the way smaller startups thought about their finances.

Franklin told Reuters a number of CEOs and startup execs had started researching other banks with which to park cash in addition to SVB UK this week, citing Barclays as a favourite among some.

"We're all going on this learning journey together. We're all looking for banks with great backing, strong brands, and solid track records," he said.

The founder of banking platform Griffin, David Jarvis, said he is in a WhatsApp group of over 200 fintech founders, of which dozens have started the process for opening new bank accounts following the collapse of SVB. He said the people were "mostly looking at the big clearing banks".

Russ Shaw, founder of startup industry body Tech London Advocates, told Reuters he would advise startups to spread their capital between different bank accounts as a matter of course. "I suspect many learned this weekend about the risk of not doing this," he said.


SPREADING MONEY AROUND


Rapid interest rate rises by the Bank of England over the past 15 months had already spurred greater competition among lenders for depositors, with smaller players gaining the upper hand as they were quicker to raise rates on products.

But the collapse of SVB has intensified scrutiny of the business models of all lenders, including specialists with smaller balance sheets to fall back on.

John Cronin, banking analyst at Goodbody, said deposit migration would continue to be a key focus for analysts and investors.

"While the issues that SVB experienced were very much institution-specific, it has raised generalised concerns around the health of bank balance sheets," he said, adding that some specialists may actually be less exposed as they rely mainly on consumer deposits.

"Lots of companies will take the time to think more carefully about how they position themselves financially in the future," said Dom Hallas, executive director at Coadec, an organisation representing UK tech startups. "But I think it's too soon to tell who the winners and losers will be."

Sources at three specialist and online lenders said they had seen inflows of business deposits in the past few days, declining to be named citing the sensitivity of the situation.

Digital banking platform Revolut saw a 5% increase in new sign-ups from businesses, particularly larger companies, last week compared to previous weeks, and a "substantial increase" in overnight balances, a spokesperson said.

The company - which has applied for a banking licence in Britain but is not yet protected by the government's deposit guarantee - said it was not able to share figures for this week.

Revolut's customers in the EU are protected by the euro zone's 100,000 euro guarantee, the spokesperson said.

Several British banks focused on retail products such as consumer savings said they had seen no change in customer behaviour since the collapse of SVB, adding that the vast majority of customer balances sat well below the 85,000 pound government guarantee and were therefore protected.

"We have had no concerns from our customers," a spokesperson for Metro Bank said. "The UK banking system remains safe and continues to operate as normal."

Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
Labour MPs Urge Chancellor to Tax Wealthy Over Cutting Welfare
Publication of UK Child Poverty Strategy Delayed Until Autumn
France Detains UK Fishing Vessel Amid Post-Brexit Tensions
Calls Grow to Resume Syrian Asylum Claims in UK
Nigel Farage Pledges to Reinstate Winter Fuel Payments
Boris and Carrie Johnson Welcome Daughter Poppy
×