HSBC executives have asked the British branch of Silicon Valley Bank (SVB) to let customers know that their funds are safe and loans supported. HSBC UK Chief Executive, Ian Stuart sent a memo to SVB staff, asking them to continue working as usual. The memo also had the signature of Group Chief Executive, Noel Quinn. In a rescue agreement mediated by the Bank of England and the UK finance ministry, HSBC agreed to purchase SVB UK for one pound on Monday.
As per the memo, HSBC has put around £2 billion ($2.42 billion) liquidity into Silicon Valley Bank UK. Moreover, the banking giant is ready to deploy more cash and liquidity, when needed. On Monday, March 13, UK Chancellor, Jeremy Hunt announced that HSBC has acquired SVB’s UK operations. Hunt further affirmed that “deposits will be protected” without the help of the taxpayers.
U.S. prosecutors investigating Silicon Valley Bank’s collapse
The sudden closure of SVB is currently being investigated by the US Justice Department. According to sources, the inquiry is still in its early stages. Moreover, there may not be any accusations of misconduct or charges brought. The Wall Street Journal (WSJ) stated that officials are also looking into stock sales made by SVB Financial Group executives.
SEC Chair, Gary Gensler said in a statement that the agency is particularly focused on monitoring market stability. The agency is also working on identifying and punishing any type of wrongdoing that can jeopardize investors during moments of turbulence.
Regulators are rushing to restrict risks to the rest of the industry after the quick death of Silicon Valley Bank and the collapse of Signature Bank. Ratings agency Moody’s changed the outlook for the American banking sector from “stable” to “negative” on March 14.
This week, shareholders filed a lawsuit against SVB Financial Group and two of its top executives. Shareholders claim that they failed to disclose, how rising interest rates would make the division vulnerable to a bank run.