HSBC Acquires SVB UK: Deposits Protected, No Taxpayer Support Needed
• The British government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC.
• Deposits are protected with no taxpayer support.
• HSBC has acquired Silicon Valley Bank UK for £1 and will be funded from existing resources.
Facilitated Sale
The British government and the central bank, the Bank of England, have facilitated a private sale of Silicon Valley Bank UK to HSBC, according to Chancellor of the Exchequer Jeremy Hunt. He stressed that „Deposits will be protected, with no taxpayer support.“
HSBC Acquisition
HSBC has acquired Silicon Valley Bank UK (SVB UK), the British subsidiary of Silicon Valley Bank (SVB) that was shut down by U.S. regulators on Friday. In a filing with the London Stock Exchange Monday, HSBC stated that its U.K. subsidiary, HSBC UK Bank plc, is acquiring Silicon Valley Bank UK Ltd. for £1 ($1.22). The filing details that as of March 10,“ SVB UK had loans of around £5.5bn and deposits of around £6.7bn.“ Moreover, for the financial year ending Dec 22 2022,the filing states that „SVB UK recorded a profit before tax of £88m,“ adding that the British subsidiary’s „tangible equity is expected to be around £1.4bn.“
Funding & Resources
HSBC noted: „The assets and liabilities of the parent companiesof SVBUK are excluded from the transaction.“ The acquisition will be funded from existing resources“ Noel Quinn, HSBC Group’s CEO commented: This acquisition makes excellent strategic sense for our business in the U.K .It strengthens our commercial banking franchiseand enhances our abilityto serve innovative and fast-growing firms including in technology and life science sectors in U .K .and internationally“.” “SVBUK customers can continue to bank as usual,“the executive clarified adding: „We warmly welcome SVBUK colleagues to HSBC , we are excitedto start working with them .“
Protection Measures
In the US ,the Department Of Treasury ,the Board Of Governors Of Federal Reserve System And Federal Deposit Insurance Corporation (FDIC )have taken measures toprotect SVB depositors they announced Sunday : “Depositors will have access to allof their money starting Monday ,March 13th No losses associated with resolutionof silicon valley bankwill be borne by taxpayer .”
Conclusion
With this acquisition ,HSBC strengthens its commercial banking franchiseeand ability to serve innovative and fast growing firms including technologyand life science sector in U .K .and abroad .Adding new services for customersto enjoy while providing protection measures so deposits aren’t lost orborne by taxpayers .
