Dug avoids Silicon Valley Bank fallout

Dug Technology had millions tied up with Silicon Valley Bank before its collapse, but is not expecting any financial loss after the US Federal Reserve assured customer deposits would be secured.

The West Perth-based high-performance computing firm had approximately $3.8 million in deposits and in transit with California-based Silicon Valley Bank when the tech lender was taken over by the Federal Deposit Insurance Corporation earlier this month. 

Although the bank largely serviced US-based tech companies and startups, its collapse prompted several Australian companies to outline their links to the lender and any potential risks their exposure might carry.

At the time, Dug said it had approximately $2.4 million of deposits held with SVB and a further $1.4 million of cash in transit from SVB accounts in the UK to the company’s transactional accounts in Australia.

Despite its exposure, Dug assured the market that it had more than sufficient liquidity to operate as normal.

A week later and the company said it was pleased to confirm that it did not expect any financial loss in respect to cash in banks operated by SVB.

“The Federal Reserve Board in the USA have provided assurance to SVB customers that bank deposits are secure,” a statement from Dug read.

“HBSC Bank have acquired the UK subsidiary of SVB and are also guaranteeing customer deposits.”

“As of 21 March 2023, the company can now direct its funds from SVB accounts to international payees and completed transfers to DUG’s Commonwealth Bank of Australia accounts.”

Dug said it was reviewing its banking relationships in light of the event.

Dug shares were up 0.63 per cent to trade at 80 cents in a $93.9 million market capitalisation.