HSBC UK has announced the acquisition of Silicon Valley Bank UK for a nominal amount of £1. This acquisition followed intense negotiations over the weekend involving the U.K. government, regulators, and potential buyers after the U.K. subsidiary of the troubled U.S. entity entered insolvency procedures on Friday.
The acquisition is seen as a positive development for the U.K. technology sector, providing relief amid the collapse of SVB and its U.K. arm. The swift completion of the deal signals the government’s support for the technology industry and trust in the financial system.
According to HSBC’s statement, the acquisition has been immediately finalized using existing resources. SVB UK had loans of approximately £5.5 billion and deposits of around £6.7 billion, with a profit before tax of £88 million in 2022. SVB UK’s tangible equity is expected to be around £1.4 billion, and further details on the gain from the acquisition will be provided later.
The Bank of England has assured the safety of depositors’ funds with SVB UK through the acquisition, ensuring the continuity of banking services without insolvency proceedings. Chancellor Jeremy Hunt confirmed the government’s role in facilitating the private sale to HSBC, protecting depositors without taxpayer assistance.
Under HSBC ownership, SVB UK’s operations will continue without disruptions, with services unchanged for customers. Employees will remain employed, and the bank will retain its authorization. The Bank of England’s resolution powers have negated previous insolvency procedure plans for SVB UK.
HSBC CEO Noel Quinn welcomed SVB UK customers, emphasizing the strategic fit of the acquisition with the bank’s vision and enhancing commercial banking capabilities for innovative sectors. Quinn reassured customers of continued convenience and safety under HSBC’s security.
Coadec Executive Director Dom Hallas praised the government’s efforts in securing the acquisition, protecting innovative U.K. companies. The sale to HSBC averted the need for wide-scale support and decreased moral hazard risks faced by failed banks and depositors.
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