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How Verto is supporting SVB customers and the broader start-up community

Verto
By Ola Oyetayo, March 13, 2023 · 5 mins read

Over the last few days Silicon Valley Bank (SVB) in the US and the UK has experienced a bank run. Given the bank’s systemic importance to the tech community this has undoubtedly impacted a lot of tech focused businesses. It’s distressing to witness a top 20 US Bank fall from grace in less than 48 hours with many start-ups facing payment challenges because of this. My utmost sympathy goes out to founders who are affected by this, some of whom are my fellow Y-combinator alumni.

As of writing this, the Federal Reserve has advised that all depositors of SVB’s US subsidiary will have access to their money from Monday 13th March and SVB’s UK subsidiary has been bought by HSBC, securing funds for those businesses that bank with SVB.

Does Verto have any exposure to SVB?

Verto does not have any exposure to Silicon Valley Bank as we do not have bank accounts or a lending relationship with them. As a regulated Electronic Money Institution we are required to safeguard customers funds in special accounts and do not have the permission to lend it out or earn interest on it.

What does it mean that “Verto is an ‘Electronic Money Institution’?”

Although many of our customers use Verto like a bank, we are not technically a bank and we do not hold customer funds directly. As a regulated Electronic Money Institution we are required to safeguard customers funds in special accounts and do not have the permission to lend it out or earn interest on it. This means that funds are fundamentally safer in a Verto account than in a deposit-taking bank account as Verto is obligated to safeguard 100% of customer funds from UK and EEA incorporated companies, with us extending this to also cover US incorporated companies.

As an EMI, Verto absolutely must not do anything with relevant customer funds, until you tell us to do so. Your funds held with Verto will be sitting safely in a segregated, safeguarded bank account held with our UK banking partners. In other words, as soon as you pay into any Verto accounts (including both settlement accounts and Global/Local accounts in your company name), the money will sit there until you initiate an FX or payment transaction on the Verto platform.

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How can Verto help customers currently banking with SVB?

Although funds deposited with SVB are not currently at risk due to the Fed’s intervention and the purchase of its UK subsidiary by HSBC, many financial experts and venture capitalists are advising companies to diversify their banking partners.

At Verto, we can provide businesses near instant access to Local USD and GBP collection accounts, allowing you to quickly move your funds to a safe and secure account, that will not be lended out. Businesses can then use Verto for all their business payments including payroll, payment of vendors and suppliers and management of internal treasuries.

For businesses who are affected by SVBs closure we’ve created a fast track application process to enable you to get access to our Global accounts so you can get back to doing what you know how to do best - running your businesses, this can be accessed here.

We look forward to continuing serving our customers with our products and services.

Yours,

Ola