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HSBC buys Silicon Valley Bank UK

Emma Lunn
Written By:
Emma Lunn

The government has struck a last-minute deal for HSBC to buy Silicon Valley Bank’s UK business for £1.

The takeover will override the Bank of England’s initial decision to place SVB UK into insolvency, after the US bank was closed and its assets seized by authorities on Friday.

SVB UK has a balance sheet worth £8.8bn and about 3,500 customers which are mostly venture capital investors and tech start-ups. These firms could have gone bust if their deposits were wiped out.

The deal means customers of SVB UK will be able to access their deposits and banking services as normal from today after a weekend of uncertainty.

The transaction was facilitated by the Bank of England, in consultation with the Treasury, using powers granted by the Banking Act 2009. A statement from HM Treasury confirmed that no taxpayer money was involved in the deal, and that customer deposits have been protected.

Chancellor Jeremy Hunt said: “The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs. I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.

“Today, the Government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support. I am pleased we have reached a resolution in such short order.

“HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”

‘Excellent strategic sense’ for HSBC

A statement from HSBC said that as of 10 March 2023, SVB UK had loans of around £5.5bn and deposits of around £6.7bn. For the financial year ending 31 December 2022, SVB UK recorded a profit before tax of £88m. SVB UK’s tangible equity is expected to be around £1.4bn.

Noel Quinn, HSBC Group CEO, said, “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.

“We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world. SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC. We warmly welcome SVB UK colleagues to HSBC, we are excited to start working with them.”

SVB UK was part of Silicon Valley Bank (SVB) based in California. The bank catered for the financial needs of technology companies, but a series of ill-fated investment decisions led to a run on the bank last week and its subsequent collapse.

Although Silicon Valley Bank (SVB) has a limited presence in the UK, experts warned that its collapse could have a significant impact on tech start-ups with money invested with the bank.