In what is a last-minute deal of relief for a large chunk of SVB customers based in the UK, HSBC has announced that it is acquiring the UK arm of SVB for a symbolic £1. According to a recent post by British PM Rishi Sunak, the transaction has been facilitated by the Bank of England, in consultation with the HM Treasury and Jeremy Hunt, using powers granted by the Banking Act 2009.
As on 10 March 2023, when the SVB fiasco embroiled, 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.
The news would come in as a major relief to Silicon Valley Bank (SVB)’s UK customers. These is a large number of consumers in the UK, specially in the tech and startup industry, many of whom were severly exposed to the SVB’s closure. What is impressive, is how quickly the British government faciliated this deal, sending out a message of confidence across the banking spectrum globally.
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.”
British PM Sunak, in a detailed LinkedIn Post, mentioned that no taxpayer money is involved, and customer deposits have been protected.
He added, “I’m often painted as some kind of tech geek. That’s a label I’m actually proud of.
I will always be on the side of entrepreneurs, innovators, young people inventing the future. Because the biggest lesson I took from my time in California still guides me now. What really matters for economic success – is innovation. If we want our country to succeed, we need to do what we’ve always done and embrace new technologies, and the people and culture that creates them. No serious analysis of our prospects could conclude anything different.”