HSBC buys the UK arm of Silicon Valley Bank – avoiding taxpayer help – after government crisis talks: UK tech companies were left on the brink of US bank collapse.
- SVB UK customers will be able to access their deposits as normal from today
- California-based parent company imploded and US regulators seized its assets
HSBC bought the UK arm of the US lender that collapsed Silicon Valley Bank after the government and Bank of England stepped in to “facilitate” a private sale.
Chancellor Jeremy Hunt confirmed this morning that all customer deposits have been protected under the agreement, without involving taxpayer cash.
It added that SVB UK customers will be able to access their deposits and banking services as normal from today.
Hunt also said the transaction was facilitated by the Bank of England in consultation with the Treasury, using powers granted by the Banking Act 2009.
California-based parent company Silicon Valley Bank imploded and US regulators seized its assets on Friday, the biggest bank failure since the 2008 crisis.
Chancellor Jeremy Hunt (pictured jogging near Downing Street this morning) has revealed that Silicon Valley Bank UK had been sold to HSBC.
The US government took steps to stem a potential banking crisis after the bankruptcy, with all deposits protected, amid fears that the factors that led to the bankruptcy could spread.
Subsequently, the Bank of England ordered its UK subsidiary insolvent from last night. This morning Mr Hunt said: “The UK technology sector is truly a world leader and of great importance to the British economy, supporting hundreds of thousands of jobs.”
“I said yesterday that we would take care of our technology sector, and we have worked urgently to deliver on that promise and find a solution that gives SVB UK customers confidence.
‘Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures that customer deposits are protected and they can bank as normal, without taxpayer support. I am pleased that we have reached a resolution in such a short time.
California-based parent company Silicon Valley Bank imploded and US regulators seized its assets on Friday, the biggest bank failure since the 2008 financial crisis.
“HSBC is the largest bank in Europe, and SVB UK clients should take comfort in the strength, security and protection it provides.”
All deposits are “safe and secure” following the sale of Silicon Valley Bank UK to HSBC, the Bank of England (BofE) has said.
In a statement, the BofE said: “The Bank of England (Bank), in consultation with the Prudential Regulation Authority (PRA), HM Treasury (HMT) and the Financial Conduct Authority (FCA), has made the decision to sell Silicon Valley Bank UK Limited (‘SVBUK’), the UK subsidiary of the US bank, to HSBC UK Bank Plc (HSBC).
‘HSBC is authorized and supervised by the PRA and the FCA.
‘This action was taken to stabilize SVBUK, ensuring the continuity of banking services, minimizing disruption to the UK technology sector and supporting confidence in the financial system.
‘The Bank and HMT can confirm that the money of all depositors with SVBUK is safe and secure as a result of this transaction.
‘SVBUK’s business will continue to be operated as normal by SVBUK. All services will continue to function as normal and customers should not notice any changes.
‘Customers can continue to contact SVBUK through normal channels and borrowers should make loan repayments to SVBUK as normal.
“SVBUK staff remain employees of SVBUK, and SVBUK remains a PRA/FCA chartered bank.”
HSBC Chief Executive Noel Quinn said: “This acquisition makes excellent strategic sense for our UK business.”
A survey of 31 venture capital funds, which have thousands of investments in UK science and technology companies, found that 34 per cent of their portfolio companies, numbering 336, have bank accounts.
More than 200 of them had faced short- or long-term cash flow risk, according to data from the BVCA, the industry body representing venture capital investors, had collapsed SVBUK.
Around £2.5bn of capital from these companies is locked up with the lender.
The Coalition for a Digital Economy (Coadec), a non-profit organization that campaigns for policies to support digital start-ups, had previously warned that the collapse of SVBUK could have had a significant impact on such companies.