Following the failure of the US lender, HSBC has acquired the UK division of Silicon Valley Bank (SVB) for £1 in a deal supported by the British government and the Bank of England.
The transaction, which was funded by HSBC’s UK subsidiary, will enhance its exposure to the UK market but have no effect on the bank’s overall balance sheet. With more than £6.7 billion in deposits and roughly £5.5 billion in loans, the move secures the deposits of numerous SVB UK customers, according to the announcement.
Noel Quinn, the CEO of HSBC, defined the acquisition as building a “strategic sense” for their UK business.
HSBC says it has acquired Silicon Valley Bank UK
"This acquisition makes excellent strategic sense for our business in the UK," HSBC CEO Noel Quinn said in a statement.https://t.co/so4s2fJTlh
— ETtech (@ETtech) March 13, 2023
In the meanwhile, SVB UK customers can “bank as usual, safe in the knowledge that the strength, safety, and security of HSBC back their deposits,” according to UK Finance Minister Jeremy Hunt.
This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC
Deposits will be protected, with no taxpayer support
I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise
— Jeremy Hunt (@Jeremy_Hunt) March 13, 2023
What actually took place?
The fall of Silicon Valley Bank was the largest in the US since the 2008 financial crisis and posed an “existential threat” to more than 250 UK-based tech companies. Ministers and top government officials spent the weekend working on an agreement to ring-fence the UK’s tech and life sciences sectors accordingly.
To safeguard the nation’s tech industry, the UK government, Bank of England, and financial regulators spent days looking for a buyer for SVB’s UK subsidiary. In order to stabilize SVB UK, ensure the continuity of banking services, limit damage to the UK technology sector, and promote confidence in the financial system, the Bank of England approved the sale.
Client deposits are safeguarded without assistance from the taxpayer
Customer deposits would be insured “without any taxpayer help,” the British government stated. Clients of SVB UK will be able to use their banking services and deposits as usual. In contrast, depositors were protected after the collapse of the Signature Bank in New York, which state regulators closed on Sunday in an effort to prevent a financial system crisis.
Governments in the UK and the US Reassure Depositors
Depositors in the bankruptcies of the SVB UK and Signature Bank have received assurances from the US and UK governments. While the UK government under Prime Minister Rishi Sunak has been working to help SVB UK clients with meeting their cash-flow commitments, the US government has launched a new lending program via the Federal Reserve with Treasury funds to SVB depositors.
