The banking sector has been in dire straits owing to the back-to-back collapses of Silvergate, Silicon Valley Bank, and Signature Bank. However, with regulators stepping into the picture, customers have been relieved to a fair extent.
UK Chancellor Jeremy Hunt confirmed the acquisition of Silicon Valley Bank’s UK business by HSBC on Monday, March 13. Moreover, Hunt asserted that “deposits will be protected” without the support of the taxpayers. He added,
“I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise.”
Commenting on the latest sale, Chief Executive Officer Noel Quinn said in the statement,
“This acquisition makes excellent strategic sense for our business in the UK. It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally.”
Furthermore, he said that SBV UK customers can continue to bank “as usual, and asserted that their deposits are backed by HSBC.
HSBC acquires Silicon Valley Bank’s UK Arm for £1
HSBC UK Bank has acquired SVB’s UK arm for £1. That translates to roughly $1.21. The sale was facilitated by the Bank of England in consultation with the UK Treasury.
A recent Reuters report brought to light that SVB UK is “ringfenced” from the US group. HSBC further clarified that the assets and liabilities of the parent company were excluded from the transaction. Notably, SVB UK has loans summing up to 5.5 billion pounds and deposits worth around 6.7 billion pounds. Alongside, the Bank of England said that SVB UK had a total balance sheet size of around 8.8 billion pounds.
Opining on the deal, Richard Marwood, senior fund manager and HSBC investor at Royal London Asset Management, said,
“On the face of it appears a good deal. SVB lacked liquidity and depositor confidence – HSBC has both of those in spades.”
As reported recently, the Silicon Valley Bank collapse left over 200 UK firms unable to pay their staff. Additionally, the country’s treasury asserted that it wants to “minimize the damage to some of our most promising companies in the UK,” following the collapse last week. Thus, the latest move seems to be a step in the said direction.