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Investor confidence in the global banking sector has been shaken
in recent weeks by the demise of Silicon Valley Bank, the
collapse of a large U.S. regional lender and the emergency
rescue of Swiss giant Credit Suisse.
Silicon Valley Bank's UK arm, which had focused on tech
start-ups, was bought by HSBC in a deal facilitated by the UK
government and the Bank of England after more than 250 UK tech
executives warned that its failure would pose an "existential
threat" to their sector.
Industry, government and regulatory bodies must now work
together to protect customers and businesses amid "a concern
that there may well be more disruption coming our way from
across the finance ecosystem," Janine Hirt, CEO of trade body
Innovate Finance, said in a statement sent to Reuters.
"Neobanks are not immune to the current market conditions, and
it is important that steps are taken to ensure they have the
support over the course of the coming weeks and months," she
said. A neobank, or digital bank, is a bank whose services are
accessed via an app or website as opposed to having physical
branches.
Hirt did not elaborate on the type of support needed.
The CEO of hedge fund Man Group told a conference in London last
week that the banking turmoil sparked by the collapse of Silicon
Valley Bank is not yet over, and he believed a significant
number of banks will fail within two years. He said that
challenger banks - lenders which are usually smaller and newer
than the big high-street banks - in Britain could be at risk.
Hirt said that Innovate Finance has been offering "close
support" to challenger banks to help them navigate the
"turbulence" in the sector.
The Bank of England and the British government have said that
the country's banking system is well capitalised and funded.
BoE governor Andrew Bailey told lawmakers this week that the
central bank was on alert amid the global turmoil, but added
that Britain was not experiencing stress linked to the demise of
Silicon Valley Bank.
(Reporting by Elizabeth Howcroft; Editing by Mark Porter)
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