HSBC injected nearly £2 billion into the United Kingdom arm of collapsed United States-based Silicon Valley Bank – which it bought this week for a nominal £1, or ₹99 – and is ready to ‘deploy more cash and liquidity as needed’, according to a LinkedIn post by HSBC UK CEO Ian Stuart. Employees were also asked to reassure clients ‘deposits are safe and loans are supported’.
“Please continue to operate as usual … it is vital that you continue to serve your clients as you have done up to now,” the memo that was sent to SVB UK staff Tuesday and shared online said.
Offering a ‘very warm welcome’, the memo – signed by Stuart and group CEO Noel Quinn – also said HSBC is making this acquisition because we think SVB UK has great people, great customers and great potential’.
On Monday British finance minister Jeremy Hunt confirmed that prime minister Rishi Sunak’s administration – spurred by a letter from over 200 of SVB UK’s clients warning that the parent bank’s dramatic collapse posed an ‘existential threat’ to tech companies operating in that country – and the Bank of England had facilitated the private sale of SVB UK to HSBC Holdings Plc.
The deal is not expected to impact HSBC’s global balance sheet but will sharpen its exposure in its home market, British publication Sky News said.
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 $US6.6 billion.
READ | HSBC buys UK arm of Silicon Valley Bank for ₹99, gets deposits worth US$ 8.1bn
“The acquisition makes excellent strategic sense for our UK business,” Quinn said, adding customers could rest easy knowing their deposits were ‘backed by the strength, safety and security of HSBC’.
BoE officials told Reuters separately that the wider banking system in the United Kingdom remains safe, sound, and well-capitalised.
READ | Goldman Sachs buying bond portfolio led to Silicon Valley Bank failure?
SVB UK’s parent company – Silicon Valley Bank – this month became the biggest American financial institution to fall since the 2008 crisis. Its fall was swiftly followed by that of another bank – Signature Bank, which had over $110 billion in assets and was the third largest failure in American history.
With input from Reuters
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