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The collapse of Silicon Valley Bank has shown the need to build a larger and more diverse financial system by bolstering the stock market and unlocking cash in pension schemes, Britain's finance minister Jeremy Hunt said on Wednesday.
Following the collapse of its parent company in the United States, Silicon Valley Bank's UK arm was sold to HSBC over the weekend to avoid disrupting its customers in Britain. SVB was heavily focused on lending to the technology sector.
Fallout from the collapse continued to roil banking shares in Europe on Wednesday.
Referring to current volatility in markets on the back of rising global interest rates, Hunt's budget said regular stress testing by the Bank of England means that UK banks are "well placed" to weather economic shocks.
The "wider UK banking system remains safe, sound and well capitalised", it said.
But the rapid sale of SVB's UK unit last weekend showed that "we need to build a larger, more diverse financing system, where the benefits of investment in high growth firms are available to more investors", Hunt said.
Hunt said he would make a statement in the autumn on how the UK financial system would be strengthened.
"It will include measures to unlock productive investment from defined contribution pension funds and other sources, make the London Stock Exchange a more attractive place to list, and complete our response to the challenges created by the U.S. Inflation Reduction Act," Hunt told parliament in his budget statement.
