HSBC UK acquires Silicon Valley UK bank for a symbolic £1, after a tense weekend of frantic negotiations by the UK government, regulators and A group of other potential suitors.
The deal is a huge relief for the UK tech sector, which was hit hard by the collapse of SVB and its UK arm, and will be seen as a boost of confidence in the financial system.
HSBC said the deal was “completed immediately”. The acquisition will be funded from existing resources. The bank added in a statement:
On 10 March 2023 SVB UK had loans of approximately £5.5 billion and deposits of approximately £6.7 billion. For the financial year ending 31st December 2022, SVB UK recorded a pre-tax profit of £88m. SVB UK’s tangible equity is expected to be around £1.4 billion. The final account of the gains on the acquisition will be provided in due course.”
The Bank of England said that the funds of all depositors with SVB-UK are safe, as the deal ensures continuity of banking services.
This means that SVB UK will now not go bankrupt.
Chancellor Jeremy Hunt said: “This morning the Government and the Bank of England facilitated a private sale of a Silicon Valley bank in the UK to HSBC. Deposits will be protected, without subsidies from taxpayers.
The Bank of England said in a statement:
SVBUK will continue to operate SVBUK’s business normally. All services will continue to operate as normal and customers should not notice any changes.
Customers may continue to contact SVBUK through the usual channels and borrowers must repay any loans to SVBUK as normal. SVBUK employees remain employees of SVBUK, and SVBUK remains a PRA / FCA approved bank.
Today’s announcement supersedes the bank’s March 10 statement that, in the absence of any other meaningful information, it intends to file an application with the court to place SVBUK in bankruptcy proceedings. Since a reliable buyer has emerged for SVBUK, the bank has decided that using its decision-making powers to stabilize troubled banks is appropriate.
No other banks in the UK are directly materially affected by these measures, or by the decision of US parent bank SVBUK. The broader UK banking system remains safe, sound and well capitalized.”
“Government deserves huge credit,” said Dom Halas, CEO of Coadec, a British non-profit that lobbies government on behalf of tech start-ups. “From the top, to the Treasury that understood the challenge and took it on board, to the huge number of civil servants Who probably haven’t slept since Friday. They have saved hundreds of the UK’s most innovative companies today.”