SVB UK acquired for £1 hands out bonuses ranging from £15m to £20m

By Al Mayadeen English
Source: News websites
19 Mar 2023 15:45
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HSBC acquired SVB UK as a subsidiary and offered employees millions worth of bonuses in a show of confidence and hopes of retaining key employees.

A person walks past an HSBC branch, in London, Monday, March 13, 2023. (AP)

The UK branch of Silicon Valley Bank (SVB UK) handed out bonuses to employees days after it was bought by HSBC for only 1 pound in a Bank of England-orchestrated agreement.

Following the buy-out, which saved the bank from insolvency, HSBC signed off on "modest" bonuses for staff including senior executives, according to sources cited Sky News.

The bonuses, which were described as a show of confidence by HSBC in employees at the newly acquired subsidiary, ranged between £15m and £20m. The payments also reaffirmed HSBC's position in honoring existing previously agreed-upon payments, in hopes that the bank would retain key staffers.

It is worth noting that SVB UK employed about 700 people in Britain and that had the bank not been acquired while still solvent, the bonuses would not have been possible.

UK Chancellor of the Exchequer Jeremy Hunt explained that the rescue of SVB UK was essential for the preservation of funding for the UK's most promising start-up companies.

HSBC acquires SVB UK for 1 pound

The UK Treasury and HSBC bank announced, on Monday, March 13, that the UK arm of the collapsed SVB was bought off by HSBC for only 1 pound sterling.

In a Treasury statement, it was highlighted that "Silicon Valley Bank (UK) Ltd has today been sold to HSBC," adding, "This transaction has been facilitated by the Bank of England, in consultation with the Treasury, using powers granted by the Banking Act 2009."

Jeremy Hunt, the UK Finance Minister said that "no taxpayer support" was involved and explained, "This (deal) ensures customer deposits are protected and can bank as normal, with no taxpayer support."

HSBC chief executive Noel Quinn said, "This acquisition makes excellent strategic sense for our business in the UK," noting that HSBC had agreed to pay only 1£ for SVB UK which had loans of about £5.5 billion and deposits of around £6.7 billion.

Moreover, the CEO confirmed that SVB UK's customers "can continue to bank as usual" and will be "safe in the knowledge that their deposits are backed by the strength, safety, and security of HSBC."

It is worth noting that California's Department of Financial Protection and Innovation (CDFPI) and Federal Deposit Insurance Corp (FDIC) announced on Friday the seizing of SVB's assets - worth nearly $175 billion - and relocating them to a newly established institution, the Deposit Insurance Bank of Santa Clara.