In a genuine bid to douse the fire of Silicon Valley Bank crisis that erupted last week, HSBC UK Bank plc, is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1. This move is seen as a strategic bid to not just rescue the UK-based startups associated with Silicon Valley Bank but also as a means to strengthen HSBC’s banking franchise in the UK. The acquisition allowed HSBC to take control of SVB UK’s current deposit worth $ 8.1bn. This would ease the pressure off UK’s growth story as far as the tech industry is concerned after SVB crisis set in last week unsettling major business players in the environment.
According to HSBC’s official press release statement, SVB UK had l**** of around £5.5bn (6.64 billion USD) and deposits of around £6.7bn (8.09 billion USD).
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
HSBC will update shareholders on the acquisition at its 1Q 2023 results on 2 May 2023.
The latest action would secure UK-based startups and depositors who have assets with SVB UK. This is the first solid attempt by a state government backing a financial institution going bankrupt since the fall of SVB last week. On Sunday, another major financial institution New York-based Signature Bank failed and was seized. After SVB, Signature Bank is the second bank in as many days that fell to bank run crisis targeting its existing $110 billion in assets, which has since been shuttered for further operations.
According to Bloomberg, there were other smaller financial institutions based out of UK that were interested in acquiring the UK arm of the SVB. Politically putting, there are no risks or liabilities on current UK-based tax payers.
We will update more on the developments related to SVB UK and US as we receive more information.
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