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HSBC buys UK arm of Silicon Valley Bank for ₹99, gets deposits worth US$ 8.1bn


The British government on Monday said it had facilitated a private sale of the United Kingdom arm of the collapsed Silicon Valley Bank to HSBC Holdings Plc’s ‘ring-fenced subsidiary’ – with help from the Bank of England – for 1 pound sterling, or around ₹99. The deal is not expected to impact HSBC’s global balance sheet but will sharpen exposure in its home market, Sky News reported.

The move secures the deposits of over 3,000 SVB UK customers with deposits of more than $US8.1 billion. SVB UK has loans of around $US6.6 billion.

“Acquisition makes excellent strategic sense for our UK business,” HSBC CEO Noel Quinn said, “SVB UK customers can bank as usual, safe in the knowledge their deposits are backed by the strength, safety and security of HSBC.

“… 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 (it) brings them,” UK finance minister Jeremy Hunt said.

BoE officials told Reuters separately that the wider banking system in the United Kingdom remains safe, sound, and well-capitalised.

The dramatic collapse of the SVB Financial Group – which focuses on tech start-ups – on Friday was the biggest in the United States since the 2008 crisis and threatened a significant impact on tech companies operating in the UK; over 250 of these had said SVB’s failure posed an ‘existential threat’.

READ | A timeline of how Silicon Valley Bank collapsed in just 48 hours

“Many businesses will be sent into involuntary liquidation overnight…” they told the British government and finance minister in a letter seen by Sky News.

Bloomberg said ministers and senior government officials spent the weekend working on a deal to ring-fence the UK’s tech and life sciences industries.

The Treasury said Sunday prime minister Rishi Sunak’s administration was working to help SVB UK clients meet cash-flow obligations. The UK arm is smaller than most of that country’s banks but wields outsized influence.

Among other contenders for the takeover was an investment firm controlled by the Abu Dhabi royal family, Bloomberg reported. Also mooted was a plan for big UK banks to offering depositors access to money until SVB released funds.

The US government, meanwhile, has also reassured depositors; a new lending programme has been offered by the Federal Reserve with Treasury funds.

That was as a second major bank shut down Sunday; Signature Bank, with over $110 billion in assets, is the third-largest failure in American history.

READ | Signature Bank closed; US bails out Silicon Valley Bank depositors

US president Joe Biden vowed to hold those responsible ‘fully accountable’.

With input from agencies

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