The Minister for Finance has said there were "many Irish customers" of Silicon Valley Bank and as such he has asked the Financial Stability Group to do an assessment of any fallout from the bank's collapse on the Irish economy.
"The US authorities have acted decisively in underpinning the deposits of the customers. I think that was a very important move which will provide confidence," Michael McGrath told reporters in Brussels today.
"Notwithstanding that, I have asked the Financial Stability Group in Ireland to do an assessment to have any impact that there may be," he said.
"There are certainly many business customers in Ireland of Silicon Valley Bank and so the Department of Finance, the NTMA, and the Central Bank are meeting today to carry out an assessment of any impact that there may be," he added.
Mr McGrath welcomed the acquisition by HSBC of a UK arm of Silicon Valley Bank (SVB).
"It may well be the case that some of the Irish customers of the bank did their business through that arm," he said.
He said the Government was engaging with Enterprise Ireland and the Department of Enterprise, Trade and Employment to get a profile of the nature of the relationship between Irish customers of SVB and how their business with the bank was being done.
The Minister said the recent rise in the cost of government borrowing, combined with the collapse in SVB, underlined the need for the prudent management of the state's finances.
He said the NTMA had sold 20 year bonds recently at 3.3% and that Ireland's finances were in a position of strength.
"That’s all positive, we’re well funded," he said.
"We are still in the very early days of seeing the consequences of the effective collapse of this bank. It will take some time for a full assessment to be done," the Minister said.
"But we have seen the costs of borrowing rise for Ireland and all other EU member states in recent times. And that just underlines the need for us to manage the public finances carefully," he added.
The Minister said he would publish the Stability Programme update on the Government's fiscal and macroeconomic forecast for this year and coming years.
The Government would be "forecasting a significant surplus for Ireland this year and indeed next year as well," he added.
Meanwhile, Irish tech firms and the Department of Finance are today assessing the impact of the collapse of Silicon Valley Bank.
The Department said it is monitoring developments and engaging with the relevant authorities.
"While there is limited direct impact on the Irish financial system, Silicon Valley Bank was a lender to some Irish companies since 2012," the Department said in a statement.
"The Department will monitor the progress of the Federal Deposit Insurance Corporation (FDIC), the US Government agency that guarantees bank deposits, in its sale of SVB and what impact that may have on domestic companies impacted by this failure."
In 2019, SVB announced plans to increase its lending to Irish tech start-ups to $500m as part of a collaboration with the Ireland Strategic Investment Fund (ISIF).
ISIF says it has around $100m invested in five investment funds that are managed by SVB Capital, a subsidiary of the Silicon Valley Bank Group.
But those investments are structured in a manner that legally ring-fences them from the rest of the SVB Financial Group and the ISIF said they do not expect any impact.
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"Certainly, Silicon Valley Bank was an important bank for this sector, there's no doubt about that," Brian Fennelly, a Partner in Deloitte's Debt & Capital Advisory team said.
He estimated it had "upwards of 100 plus borrowers" here.
The chair of not-for-profit Scale Ireland, which supports Irish tech start-ups and scale-up companies, has said the demise of Silicon Valley Bank is widely seen as a major concern by the sector.
Brian Caulfield said SVB was a main supporter of tech start-ups in Ireland.
He said SVB been a very important part of the tech start-up sector and was one of the few banks that really understood technology. It had been an active lender to the tech sector in Ireland for many years, he added.
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Speaking on RTÉ's Morning Ireland, Brian Caulfield said SVB "was certainly one of the very few banks that, for example, would lend to semiconductor businesses and relatively early-stage software businesses."
Mr Caulfield said the announcement that HSBC is acquiring Silicon Valley Bank UK is "huge" and will avert problems for quite a few companies.
But whether HSBC will be as positive towards the sector in terms of new lending very much remains to be seen, he added.
"But the news for people this morning that their deposits are secure, it will literally save jobs in the sector," he added.
He said that he understands that HSBC is going to take on the existing staff and loans and deposits are going over to HSBC.
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"So, I think people will find hopefully that they're at least dealing with the same individual," he said.
"Silicon Valley Bank had a very, very strong reputation for when difficult situations arose in a company, they would always work with the company and the investors to try and achieve the best possible outcome and obviously it remains to be seen whether HSBC will take a similar approach," he added.
Meanwhile, the European Commission is monitoring the situation after the collapse of tech lender Silicon Valley Bank which has a very limited presence in the European Union, a spokesperson for the EU executive said today.
"We take note of the swift and decisive reaction by US authorities. At EU level, there is a very limited presence of Silicon Valley Bank in the EU and we are in touch with the relevant competent authorities," the Commission spokesperson said.
Additional reporting by Brian O'Donovan
