McGrath sets up task force to monitor banks and tech after SVB collapse

Finance Minister Michael McGrath (Niall Carson/PA)

Jon Ihle

March 14 2023 11:18 AM

The Minister for Finance has put together a task force to monitor the impact on the Irish financial system of the failure of Silicon Valley Bank in the US.

The group, which is made up officials from the Department of Finance, the NTMA and the Central Bank, was set up after a meeting of the Financial Stability Group on Monday to discuss the evolving situation.

The new committee will coordinate “enhanced monitoring and reporting on the domestic impacts arising from the failure of SVB” and meet on a regular basis, reporting to finance minister Michael McGrath, the Department of Finance said in a statement.

“It is important to highlight the limited direct impact on the Irish financial system of the failure of Silicon Valley Bank,” said Mr McGrath.

“The retail banks operating in Ireland have no exposure to this bank. The swift actions taken by regulatory authorities in the US and the UK are important in ensuring that SVB clients can access their deposits and credit facilities.”

The task force also includes officials from departments and State agencies that have direct relationships with the tech sector in Ireland, where exposure to the problems at SVB are most acute.

Earlier Tuesday, listed venture capital firm Molten Ventures has moved to reassure shareholders about its funding lines following the collapse of Silicon Valley Bank (SVB), one of its main bankers.

The company, which has financed some of Ireland's best-known tech start-ups, told investors this morning that a £60m undrawn credit line partially provided by SVB UK was still available after the lender was bought by HSBC in a rescue deal Monday.

“SVB UK is one of two banks, the other being JP Morgan Chase Bank NA (JPM), that provide Molten’s current RCF (which is undrawn) of up to £60m and a £90m term loan,” Molten Ventures said in a notification to the London Stock Exchange.

“SVB UK provides 40pc of the facilities and JPM 60pc. Following the acquisition by HSBC of SVB UK, the facilities will continue to be available to Molten. Furthermore, Molten has a strong cash position, with gross cash balances currently in excess of £30m of which less than £1m is currently deposited with SVB UK.”

Molten Ventures has also acted to shore up its portfolio companies in the wake of SVB’s failure, which left thousands of tech companies worldwide in the dark about the fate of their deposits and loan facilities with the bank, until the US government stepped in with a rescue plan on Sunday night.

Molten said it did not “anticipate any meaningful liquidity impact from the failure” but that it had “worked closely” with its portfolio companies to improve their position in recent days. The company did not specify what action it had taken.

Gerry Hennigan, an analyst with Molten’s company broker Goodbody, said the announcement provided “clarity and comfort” to the market and would be welcomed by investors.

Molten shares were up more than 4pc by midmorning, having fallen by nearly 20pc in the last five trading sessions.

Most of those declines came last Thursday when SVB was forced to raise equity to cover losses on its bond holdings, which it was liquidating to cover customer withdrawals.

Molten held its initial public offering on the Irish Stock Exchange in June 2016 and has invested nearly £1bn in dozens of digital tech companies in the years since, becoming the largest publicly listed tech VC firm.

It currently has a portfolio of 78 firms, including Irish companies Currency Fair, Manna, Vaultree, Roomex, Sweepr and &Open. It also has stakes in Revolut and Trustpilot.