HSBC buys UK arm of stricken Silicon Valley Bank for £1
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The British government and the Bank of England had facilitated a private sale of the British arm of Silicon Valley Bank to HSBC for £1.
PHOTO: REUTERS
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LONDON - HSBC bought the British arm of stricken Silicon Valley Bank (SVB) for a symbolic £1 (S$1.60) on Monday, rescuing a key lender for technology start-ups in Britain and helping curb the fallout from the biggest bank collapse since the 2008 financial crash.
The move comes after the US authorities moved to shore up deposits
The deal, which sees one of the world’s biggest banks, with US$2.9 trillion (S$3.9 trillion) of assets, take the doomed British arm of the tech lender under its wing, brings to an end frantic weekend talks between the government, regulators and prospective buyers.
“HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them,” said British Finance Minister Jeremy Hunt.
“We were faced with a situation where we could have seen some of our most important companies – our most strategic companies – wiped out, and that would have been extremely dangerous.”
Asked about HSBC’s white-knight role, he said the Finance Ministry’s priority had been to avoid using UK taxpayers’ money.
The Bank of England said it had organised the sale to underpin confidence in the financial system and minimise any fallout for British technology firms.
It said deposits at the bank were safe as a result of the sale, and that the wider banking system was safe.
Britain’s blue-chip FTSE 100 index of shares was down 1 per cent in early trading, after sliding 1.7 per cent on Friday amid wider global market turmoil sparked by SVB’s collapse. HSBC shares were down 1.7 per cent.
“On the face of it, it appears a good deal,” said Mr Richard Marwood, senior fund manager and HSBC investor at Royal London Asset Management. “SVB lacked liquidity and depositor confidence – HSBC has both of those in spades.”
SVB UK is ring-fenced from the US group, and HSBC said the assets and liabilities of the parent firm were excluded from the transaction. “This acquisition makes excellent strategic sense for our business in the UK,” HSBC chief executive Noel Quinn said in a statement.
SVB UK has loans of around £5.5 billion and deposits of around £6.7 billion, HSBC said, adding that the takeover is completed immediately. The Bank of England said SVB UK had a total balance sheet size of around £8.8 billion.
Unlike the United States, Britain has not announced broader liquidity measures for the banking system. Dozens of listed British companies issued statements on Monday about their exposure to SVB UK, seeking to reassure investors, or in some cases warn them, just as news of the rescue deal was announced.
Others had also examined buying the bank.
Bank of London said on Sunday it had submitted a formal proposal. SoftBank-owned lender OakNorth Bank also weighed a bid, a source told Reuters.
Abu Dhabi state-backed investment vehicle ADQ was also looking, according to media reports.
Meanwhile, Canada’s banking regulator seized control of SVB’s branch in Toronto on Sunday and said it would seek a legal order to wind up the operation. The branch in Canada mainly lends to corporate clients, and does not hold any commercial or retail deposits. REUTERS
