SVB: HSBC Holdings Plc will buy the British division of the American Silicon Valley Bank, closed by US regulators on March 10. The HSBC announcement notes that its HSBC UK Bank division is acquiring Silicon Valley Bank UK Ltd. for 1 lb.
« The deal is strategically important to our business in the UK, » said HSBC Chief Executive Officer Noel Quinn. « SVB UK customers can continue to use the bank as usual, in the full confidence that the stability and safety of HSBC guarantee their deposits. »
Hours after US regulators announced the closure of Silicon Valley Bank in the US, the Bank of England said it would also be forced to declare its UK arm insolvent.
SVB UK, although small compared to the UK’s largest banks, plays a huge role in the startup world. Therefore, the country’s government, the Central Bank, and several other regulators have been looking for acceptable solutions all weekend that would protect SVB UK customers from potential problems, writes the Financial Times.
UK Treasury Secretary Jeremy Hunt advocated the sale of SVB UK, noting that this would allow the government to avoid intervention to protect savers. On Sunday, he said there was a « serious risk » to technology and life sciences clients of SVB UK, whose founders have warned of major problems if they fail to pay salaries and bills this week.
According to FT sources, among the applicants for the purchase of SVB UK was a Middle Eastern investor. British OakNorth and Bank of London also applied.
SVB UK has about 3.3 thousand clients in Britain, including startups funded by venture capital investors, the sources say.
The California Department of Financial Protection and Innovation closed Silicon Valley Bank on March 10 and appointed it as the Federal Deposit Insurance Corporation (FDIC) administrator. It was the biggest banking collapse since the financial crisis of 2008 when Washington Mutual Inc. bank collapsed.
The FDIC created the Deposit Insurance National Bank of Santa Clara (DINB) to protect insured depositors. Accordingly, all insured deposits of Silicon Valley Bank were transferred to it, access to which depositors will receive no later than the morning of March 13.
Silicon Valley Bank had 17 branches in California and Massachusetts. The central office and all bank branches will resume work on Monday, and online banking and other services will also become available.
Regulators are also auctioning SVB to contain the effects of the bank’s historic collapse last week.
As of December 31, 2022, the corporation said the total assets of Silicon Valley Bank amounted to almost $209 billion, and the total volume of deposits was about $175.4 billion. The number of uninsured deposits will be decided after the FDIC obtains more information from the bank and customers.
The FDIC insures deposits up to $250,000. The total volume of the insurance fund at the end of 2022 was $128.2 billion.
Silicon Valley Bank is the sixteenth largest bank in the US, with startups as the bulk of its clients.
Last week, SVB Financial Group, the parent company of Silicon Valley Bank, announced an emergency sale of US government bonds and mortgage-backed securities totaling $21 billion from the bank’s portfolio due to a larger-than-expected outflow of customer funds from deposits. SVB lost $1.8 billion due to the emergency sale of bonds.
