HSBC buys UK arm of Silicon Valley Bank for 1 pound; Bank of England backs move

The Rishi Sunak government said it has facilitated HSBC to buy the embattled British arm of Silicon Valley Bank for 1 pound. No taxpayer money is involved in the deal

Update: 2023-03-13 14:08 GMT

The Rishi Sunak government in the UK announced on Monday (March 13) that it has facilitated London-based banking major HSBC to buy the embattled British arm of Silicon Valley Bank for 1 pound. This will secure the deposits of more than 3,000 customers worth around 6.7 billion pounds.

Santa Clara, California-based Silicon Valley Bank, which specialised in lending to technology companies, was shut down by US regulators last Friday in what was the largest failure of a US bank since 2008.

According to experts, although the UK arm of SVB is small with only around 3,000 business customers, its collapse would have presented a risk for the tech sector, which is seen as crucial to Britain’s economic growth.

Also read: US swoops in to protect SBV deposit holders; Signature Bank also shuts down

HSBC said it bought SVB UK, which has a balance sheet of 8.8 billion pounds, for 1 pound. “This acquisition makes excellent strategic sense for our business in the UK,” HSBC said. 

“It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally,” said Noel Quinn, HSBC Group Chief Executive.

The deal makes use of the UK’s post-crisis banking reforms, which introduced powers to safely manage the failure of banks. This sale has protected both the customers of SVB UK and taxpayers, according to the UK government. 

The government said it has a dynamic start-up and scale-up ecosystem and therefore it is pleased that a private sector purchaser has been found for a bank that funds those sectors.

Also read: Fate of Indian startups hangs in balance as Silicon Valley Bank crisis unfolds in US

Customers of SVB UK will be able to access their deposits and banking services as normal as a result of the transaction, which was facilitated by the Bank of England in consultation with the UK Treasury department using powers granted by the country’s Banking Act 2009.

No taxpayer money

The Treasury stressed that no taxpayer money is involved.

The UKs tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs. “I said yesterday [Sunday] that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UKs customers with confidence,” said UK Chancellor Jeremy Hunt.

“Today, the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support. I am pleased we have reached a resolution in such short order. HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them,” he said.

With agency inputs

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