Silicon Valley Bank’s UK unit acquired by HSBC
- ByStartupStory | March 13, 2023
HSBC Holdings Plc is set to purchase the UK division of Silicon Valley Bank, following a busy weekend where bankers and ministers searched for solutions to avoid the collapse of the SVB unit. According to a statement from HSBC, the bank’s ring-fenced subsidiary, HSBC UK Bank plc, will acquire Silicon Valley Bank UK Limited (SVB UK) for a mere £1.
Noel Quinn, CEO of HSBC, expressed his enthusiasm for the acquisition in a statement, saying, “This purchase is an ideal strategic move for our UK business. Customers of SVB UK can continue banking as usual, secure in the knowledge that their deposits are supported by HSBC’s strength, safety, and security.”
Over the weekend, government officials and ministers worked on proposals to protect the UK’s technology and life sciences sectors, which were expected to be severely impacted without intervention. Although relatively small compared to the country’s major banks, Silicon Valley Bank plays a significant role in the startup world, describing itself as the “preferred banking partner for investors, entrepreneurs, and founders.”
Various banks were suggested as potential buyers for Silicon Valley Bank’s UK unit, with a government-backed deal being the preferred solution. Over the weekend, Bank of London Group announced that it had presented a formal proposal to the Treasury, Bank of England, and SVB UK’s board. Other interested parties reportedly included Royal Group, an investment company controlled by a prominent Abu Dhabi royal, and OakNorth, a lender backed by SoftBank Group Corp. Bloomberg had earlier reported on these potential acquisitions.
An alternative proposal involved big banks assuming the deposits of SVB Financial Group’s UK division. This would have enabled SVB’s depositors to access their funds through other banks until they were released from the lender.
Approximately 180 tech firms leaders expressed their concerns about the potential loss of deposits at Silicon Valley Bank in an open letter to former UK Foreign Secretary Jeremy Hunt, warning that it could severely harm the sector and set it back two decades. “Help is needed by tomorrow,” said Michael Moore, Director General of the British Private Equity and Venture Capital Association, before the government’s intervention. Long-term support will be required to safeguard the UK’s innovators, entrepreneurs, and funders, he added. Following the collapse of Silicon Valley Bank, US financial regulators took action on Sunday to provide assurance to all depositors that their money is secure. As part of this effort, a new lending program has been established by the Federal Reserve with funds from the Treasury Department.
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