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Western EuropeFebruary 1 2013

Banks to watch in 2013, Silicon Valley Bank

The Banker has identified 13 banks to keep an eye on in the coming year based on a variety of factors. US-based Silicon Valley Bank's launch of its full-service bank in London, targeting what it calls innovation companies, makes it one to watch.
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Coming from the heartland of technology innovation, California-based Silicon Valley Bank (SVB) has now got its sights set on the UK.

In June 2012, it launched a full-service bank in London and Phil Cox, head of UK, Israel and India for SVB, says he has been “more than pleased” with the bank’s progress.

SVB’s target market is technology, life science and cleantech companies, which the bank refers to as “innovation companies”, across the UK. The clients range from small start-ups to large public companies. “We lend to technology companies from the early stages, often alongside a first professional investor right through their growth phases to larger, mature businesses. Our loan sizes are typically between £500,000 ($803,000) to £50m, and we have committed just over £300m to UK companies in 2012 alone,” says Mr Cox.

SVB aims to provide regular banking services better than the traditional clearing banks in the UK, but it is in the area of lending where the bank is really carving its niche. Assessing the creditworthiness and value of tech companies requires a different skillset as many new companies do not have proof of earnings.

“We will assess the technology itself, the market the company is looking to disrupt, the management team and the investors. It is really no good to ask for three years of accounts and wanting to see a profitable track record. These companies would not likely be able to demonstrate that, and they need a lender to look differently at their needs – we do that,” says Mr Cox.

Mr Cox is optimistic about the potential of the UK market. “Business can be started now on limited capital and there seems to be a real sense of optimism for being your own boss instead of working for that global corporate. If you take the entrepreneurial spirit, quality of the university research and education programmes, availability of business start-up funding, incubator programmes and the development of technology/innovation clusters, and overlay the venture capital and private equity money in the UK, there are many ingredients for success,” he says.

With more deposits than loans, the bank plans to accelerate its lending in the coming months. “We don’t really measure ourselves on absolute market share numbers – we are not a bank fixated on these things – nor becoming big just for the sake of it. We are focused on our niche and our core competency is to support our clients in their efforts to be successful,” says Mr Cox.

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