HSBC UK has acquired Silicon Valley Bank UK for a nominal fee of £1, following negotiations with the UK government, regulators, and other potential buyers. The deal is a massive relief to the UK technology sector, which was highly exposed to the collapse of SVB and its UK arm, and will be seen to have supported confidence in the financial system.
According to a statement made by HSBC, “The transaction will be completed immediately and the acquisition will be funded from existing resources.”
Noel Quinn, HSBC Group CEO welcomed Silicon Valley Bank UK customers in a statement, saying they could continue to bank as usual:
“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 in the UK and internationally, including in the technology and life science sectors.
We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world. SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety, and security of HSBC. We warmly welcome SVB UK colleagues to HSBC; we are excited to start working with them.”
The sale means the UK will avoid introducing the system-wide support the US Treasury has been forced to introduce today to protect depositors. It also reduces the ‘moral hazard’ risk where failed banks and depositors assume they’ll always be bailed out. SVB UK shareholders are the main victims and will lose their equity in the bank.
The Bank of England has assured depositors that their money is safe, and the deal will ensure the continuity of banking services. The acquisition is expected to strengthen HSBC’s commercial banking franchise and enhance its ability to serve innovative and fast-growing firms, particularly in the technology and life-science sectors. SVBUK shareholders will lose their equity in the bank.