HSBC bought the UK branch of the bankrupt Silicon Valley Bank (SVB) after the government and the Bank of England stepped in to “facilitate” the private sale.
The government said the acquisition “provides protection for customer deposits and the ability to conduct regular banking without taxpayer assistance.”
Silicon Valley Bank, a leading technology bank heavily involved in startup funding, was closed in the US on Friday, with its UK branch due to go into liquidation over the weekend.
The collapse shook the banking and technology sectors, affecting thousands of companies.
In a statement, Chancellor Jeremy Hunt said: “The UK tech sector is truly a global leader and is of the utmost importance to the UK economy, supporting hundreds of thousands of jobs.
“I said yesterday that we will look after our tech sector and we have been working urgently to deliver on that promise and find a solution that will instill confidence in SVB’s UK customers.”
The Bank of England issued a statement calling for all deposits to be “safe and sound” after the sale. She announced the deal this morning following talks involving the Prudential Regulatory Authority, the Treasury and the Financial Conduct Authority.
Bank and GMT [the Treasury] We can confirm that as a result of this transaction, the money of all depositors is safe with SVB UK,” the company said in a statement.
“SVB UK activities will continue to be carried out by SVB UK as usual. All services will continue to operate as normal and customers should not notice any changes.”
The move will reassure many in the industry amid fears that a bank failure could affect the entire UK tech industry.
The sale to HSBC was reportedly completed for just £1, with HSBC CEO Noel Quinn telling shareholders that it “enhances our ability to serve innovative and fast-growing businesses”.
Despite being a relatively small bank in the UK market, SVB has been the bank of choice for many start-ups and has positioned itself as “the banking partner of choice for founders, entrepreneurs and investors”.
HSBC also released a statement outlining the financial position of SVB UK and said it has around £5.5bn in loans.
The collapse of SVB in the US came after the bank announced that it suffered a $1.8 billion loss from selling its bond deposits to meet its obligations.
The announcement startled many investors as clients attempted to withdraw around $42 billion worth of deposits on Thursday.
The bank’s share price then fell by 60 percent and trading in its shares was completely halted on Friday before US regulators intervened.
Source: I News
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