CNA – HSBC bought the United Kingdom (UK) arm of stricken Silicon Valley Bank (SVB) for a symbolic GBP1 yesterday, rescuing a key lender for technology start-ups in Britain and helping curb the fallout from the biggest bank collapse since the financial crash.
The deal, which sees one of the world’s biggest banks, with USD2.9 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.
It came after US authorities moved to shore up deposits and stem any wider contagion from the sudden collapse of its parent SVB.
But a global rout in stocks continued yesterday, with European banks shedding as much as six per cent on the day. That left them on track for their worst two-day drop since the Ukraine war began in February 2022. HSBC shares were down 3.8 per cent.
The rescue of SVB UK was welcomed by British government ministers, regulators and technology start-ups, who said customers would be able to bank as normal.
“HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them,” Britain’s Finance Minister Jeremy Hunt said.
“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,” Hunt told reporters.
Asked about HSBC’s white-knight role, Hunt said the Finance Ministry’s priority had been to avoid using British taxpayers’ money. One pound is worth USD1.21.
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.
