HSBC swoops in as white knight for Silicon Valley Bank, buys collapsed lender’s UK unit for £1
- “This acquisition makes excellent strategic sense for our business in the UK,” HSBC’s CEO Noel Quinn said in a statement
- The deal, which has already been completed, excluded assets and liabilities of SVB, leaving HSBC to finance the acquired entity from existing resources
The ring-fenced British business of HSBC will pay a nominal £1 (US$1.21) for the UK unit of SVB, following efforts by the Bank of England and the British government all weekend to find a buyer.
SVB UK’s tangible equity is estimated at around £1.4 billion, HSBC said. The deal, which has already been completed, excluded assets and liabilities of SVB, leaving HSBC to finance the acquired entity from existing resources.
Government officials raced to find a buyer for the UK arm, fearing a potential crisis among British technology firms if they were unable to access capital and pay their staff following the bank’s closure.
Jeremy Hunt, the Chancellor of the Exchequer, had hoped to avoid the government being forced to step in with a plan to support UK tech firms, at a time when the country is struggling with a cost-of-living crisis among average Britons.
SVB UK, which entered the UK in 2004 to serve tech clients and start-ups, had loans of around £5.5 billion and deposits of around £6.7 billion as of Friday. It earned £88 million in pre-tax profit last year.
SVB collapsed last week after regulators in the United States took control of it following a run on its deposits that left the medium-sized lender flailing and unable to stay afloat. The lender had been the go-to bank for start-ups across the US since the 1980s.
On Sunday night, American regulators said they would use emergency measures to guarantee all deposits for SVB customers in the US, fearing a run on smaller regional banks sparked by the SVB collapse.
New York regulators were forced to step in and take over a second bank, Signature Bank, on Sunday. Signature had served as a lender for several cryptocurrency companies.