Ashish Ranjan
HSBC Holdings Plc is acquiring the UK division of Silicon Valley Bank, the culmination of a frantic weekend in which ministers and bankers investigated various options to prevent the collapse of the SVB subsidiary.HSBC UK Bank plc is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1 million “Monday, HSBC announced in a statement.
This acquisition makes strategic sense for our business in the United Kingdom “Noel Quinn, chief executive officer, said in the statement. “SVB UK customers can continue banking as usual, knowing that their deposits are backed by the fortitude, safety, and security of HSBC.”
Following warnings that the UK’s technology and life sciences industries would be incapacitated without intervention, ministers and officials spent the weekend formulating plans to protect them. SVB describes itself as the “go-to banking partner for founders, entrepreneurs, and investors” despite being relatively tiny compared to the UK’s largest banks.”
Numerous lenders were proposed as potential purchasers, with such a transaction being the government’s preferred option. Bank of London Group Ltd., a nascent clearing bank, said in a statement on Sunday that it had submitted a formal proposal to the Treasury, the Bank of England, and the board of SVB UK. Earlier on Sunday, Bloomberg reported that Royal Group, an investment firm controlled by a prominent Abu Dhabi sovereign, and SoftBank Group Corp.-backed lender OakNorth were also considering a takeover.
Another proposal was for lenders to accept deposits from the British arm of SVB Financial Group. Under the proposal, several large banks would have provided SVB’s depositors with access to funds until the lender released their funds.
In an open letter to Hunt seen by Bloomberg, the executives of approximately 180 tech companies stated that the loss of deposits at SVB would have the potential to cripple the industry and set the ecosystem back 20 years.
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“This is an emergency situation. Assistance is required by tomorrow “Prior to the Treasury’s intervention, Michael Moore, the director general of the British Private Equity and Venture Capital Association, stated. “Long-term support will be necessary to defend the innovators, entrepreneurs, and funders of the United Kingdom.”
The announcement comes after US financial regulators moved on Sunday to assure all depositors that their funds are secure following the failure of Silicon Valley Bank and established a new lending programme offered by the Federal Reserve using funds from the Treasury Department.
