LONDON, March 12 (Reuters) – A would-be buyer for the UK arm of failed U.S. lender Silicon Valley Bank (SVB) stepped forward on Sunday as British Prime Minister Rishi Sunak said his government was working to limit any fallout for companies from the bank’s demise.

Bank of London said it had submitted a formal proposal to the UK arm of SVB, as well as sending it to authorities, including the Treasury and the Bank of England.

Friday’s dramatic failure of SVB Financial Group (SIVB.O), which focuses on tech startups, was the biggest bank collapse in the U.S. since the 2008 financial crisis.

The collapse could have a significant impact on British technology companies, given the importance of the lender to some customers, finance minister Jeremy Hunt said earlier on Sunday,

Bank of London, a clearing bank, said it was leading a consortium of private equity firms in making the approach.

“Silicon Valley Bank cannot be allowed to fail given the vital community it serves,” Bank of London co-founder and CEO Anthony Watson said.

SoftBank-owned lender OakNorth Bank is also weighing a bid to buy SVB UK Ltd, a person with knowledge of the talks told Reuters, confirming an earlier Sky News report. Abu Dhabi state-backed investment vehicle ADQ is also looking, Sky reported.

The BoE has said it is seeking a court order to place the UK arm of SVB into insolvency.

Meanwhile, advisory firm Rothschild & Co was exploring options for the subsidiary, two people familiar with the discussions told Reuters on Saturday.

Sunak said he understood “the anxiety and the concerns customers of the bank have”, in comments made to reporters flying with him to the United States. He and the government were “making sure we can work to find a solution that secures people’s operational liquidity and cash-flow needs”, he said.

Hunt told Sky News that efforts were focused on finding a “longer-term solution that minimises, or even avoids completely, losses to some of our most promising companies.”

“We will bring forward very soon plans to make sure people are able to meet their cash-flow requirements to pay their staff,” Hunt said.

The government is weighing involving the British Business Bank to help SVB’s customers, said one person, to help address firms’ cash needs. The BBB is government-owned but independently managed, specialising in supporting start-up firms. During the pandemic it ran the state-backed loans programmes.

Banks including Lloyds Banking Group (LLOY.L) and NatWest Group (NWG.L) had been approached to see if an emergency takeover deal can be reached, people familiar with the matter told Reuters.

But an executive at a major UK bank said it was unlikely a high street lender would buy SVB UK because its credit products would not be a good fit for a mainstream bank.

EXISTENTIAL THREAT

More than 250 UK tech firm executives signed a letter addressed to Hunt on Saturday calling for government intervention and warned of an “existential threat” to the UK tech sector, a copy seen by Reuters shows.

Under insolvency proceedings for banks in Britain, some depositors are eligible for up to 85,000 pounds ($102,000) of compensation, or 170,000 pounds for joint accounts.

Customers may not be able to recover deposits in excess of those sums, which are small relative to the deposits some startups had with the bank.

Hunt reiterated comments by the BoE that overall, SVB had a limited presence in Britain and did not perform functions critical to the financial system.

The pledge to find emergency support was welcomed by tech firms and lobby groups, including startup industry body Coadec, calling it “an acknowledgement of the scale of the challenge”.

OakNorth Chief Executive Rishi Khosla told Reuters earlier this month – before SVB’s implosion – the bank could make a “nine figure” acquisition in cash given its reserves, and that it was looking at potentially buying another bank in Britain.

Opposition Labour shadow finance minister Rachel Reeves urged Hunt to offer more than “warm words”, saying the government had to come up with a plan before financial markets open on Monday.

Sunak has said he wants to turn Britain into the “next Silicon Valley”. Britain is behind only the United States and China in terms of the level of venture capital funding for the sector, according to the government.

In the U.S., authorities are preparing “material action” on to shore up deposits in Silicon Valley Bank (SVB) and try to stem any broader financial fallout from its sudden collapse, sources familiar with the matter told Reuters on Sunday.

Officials worked through the weekend to assess the impact of the failure, with a particular eye on the venture capital sector and regional banks, the sources said.

Some financial industry executives and investors are growing increasingly concerned that the collapse of the bank could have a domino effect on other U.S. regional banks if regulators do not find a buyer to protect uninsured deposits.

($1 = 0.8314 pounds)

Reporting by Andrew MacAskill and William Schomberg; Additional reporting by Elizabeth Piper, Lawrence White, Iain Withers, Baranjot Kaur and Sinead Cruise; Editing by Frank Jack Daniel, David Holmes, John O’Donnell and Alexander Smith

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