SVB UK sold to HSBC for only 1 pound, no taxpayer money involved
The UK Treasury and HSBC bank announce that the latter acquired the UK branch of Silicon Valley Bank, confirming customers can continue business as usual.
The UK Treasury and HSBC bank announced, on Monday, that the UK arm of the collapsed Silicon Valley Bank (SVB) was bought off by HSBC for only 1 pound sterling.
The Bank of England and the UK Treasury oversaw the deal after panic ensued among the nation's technology and life science customers of SVB's UK branch.
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.
According to Quinn, the acquisition "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."
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.
The new body will be responsible for making payments to clients with insured deposits on Monday, while the remaining assets will be auctioned to pay other depositors.
Read more: Canadian authorities temporarily control Canadian branch of SVB