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HSBC acquires Silicon Valley Bank UK for £1

LONDON — HSBC on Monday 13 announced a deal to buy the U.K. subsidiary of collapsed U.S. tech startup lender Silicon Valley Bank, following all-night talks. HSBC confirmed that its U.K. ring-fenced subsidiary, HSBC UK Bank, had agreed to acquire SVB U.K. for £1 ($1.21). The assets and liabilities of SVB U.K.’s parent company are excluded from the transaction. As of Friday, SVB U.K. had loans of around £5.5 billion and deposits of around £6.7 billion, with £88 million of full-year profit before tax in 2022, HSBC highlighted in the Monday statement. The bank expects SVB U.K.’s tangible equity to be around £1.4 billion, but added that “final calculation of the gain arising from the acquisition will be provided in due course.” The sale, facilitated by the Bank of England in consultation with the U.K. Treasury, will protect the deposits of SVB U.K. clients, the Treasury said in a statement.Shares of HSBC provisionally closed 4.1% lower on Monday.

The sale, facilitated by the Bank of England in consultation with the U.K. Treasury, will protect the deposits of SVB U.K. clients, the Treasury said in a statement. Shares of HSBC provisionally closed 4.1% lower on Monday. Parallel to that, U. S. Plans to support depositors and financial institutions connected to the U.S. were approved by regulators on Sunday. S. mother company SVB. The U. S. Both SVB and New York-based Signature Bank received designations from the Treasury Department. , which was closed down on Sunday due to similar contagion concerns, as systemic risks, allowing it to wind down both institutions in a way that safeguards depositors.

For the past seven years, Toby Mather, the CEO and co-founder of the young children's education platform Lingumi, has been a client of the struggling lender, depositing 85% of the business's cash there. He claimed on Monday that British startups breathed a "big sigh of relief" following the HSBC acquisition.

HSBC acquires Silicon Valley Bank UK for £1; Gets deposits worth US$ 8.1  Bln, BFSI News, ET BFSI

The acquisition “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 U.K. and internationally,” said HSBC Group CEO Noel Quinn. “SVB U.K. customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC.” “final calculation of the gain arising from the acquisition will be provided in due course.” British Finance Minister Jeremy Hunt stressed that the deal “ensures customer deposits are protected and can bank as normal, with no taxpayer support.” “The U.K.’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs,” he added. Hunt had on Sunday said that the U.K. administration and the Bank of England were working to “avoid or minimize” potential damage resulting from the U.K. branch of SVB. 

Andrew Griffith, economic secretary with the U.K. Treasury, signaled that the fallout of SVB’s U.K. branch did not represent a “systemic issue,” amid market concerns of a broader spread of withdrawals among lenders. “The Bank of England governor has been very clear about the fact that this wasn’t a systemic issue,” he told CNBC’s Silvia Amaro Monday. “We’ve now resolved this bank, we’ve resolved that decisively, and it’s now well capitalized with HSBC standing behind that, and customers will continue to have access to their deposits and their banking facilities, while still protecting the taxpayers’ interests.” Stating the need to support the businesses served by SVB, which had focused on tech startups: “It’s an important sector to us, and in particular they rely on their access to cash to do what they’re exceptionally good at,” he said. “So it was a clear priority for us to be able to give them the certainty this morning, if we could, that they could continue to operate their business.”

“I think I speak on behalf of UK startups when we say this is a huge relief and we can look our teams in the eye at 9 o’clock in our all-hands calls, which were going to be pretty nerve-racking this morning and say, not only will we be able to make the next payroll, but we can continue business as usual, continue innovating, doing our research and development and building the future of U.K. technology growth,” he said. “HSBC is a great outcome … for the bank to go to a really large household name that has hundreds of years of history, I think is one of the best outcomes we could have had to feel like we can now stay with the new SVB, which has been such an important partner to the startup ecosystem, here and in the U.S. for decades now, so we feel confident.” - Toby Mather

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