A last-minute acquisition of Silicon Valley Bank UK by high street lender HSBC for £1 will safeguard the deposits of thousands of entrepreneurs throughout the UK.
According to the government, the Bank of England facilitated the deal after consulting with the Treasury. There is no use of tax dollars, according to the Treasury.
After a weekend of crisis discussions hosted by the government in an effort to stop startups from all around the country from failing, HSBC acquired Silicon Valley Bank UK. The largest bank failure since 2008 occurred on Friday when Silicon Valley Bank, based in California, failed due to its inability to meet withdrawal demands.
As of 13 March 2023, its UK unit, which reportedly serves more than 3,000 companies, faced bankruptcy without a buyer or government assistance.
“This acquisition makes tremendous strategic sense for our business in the UK,” stated Noel Quinn, CEO of HSBC Group. It improves our ability to serve creative and quickly expanding businesses, especially those in the technology and life science industries, both domestically and abroad, and strengthens our commercial banking franchise.
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According to a statement from London-based HSBC, as of March 10, SVB UK had deposits totaling about £6.7 billion and loans of about £5.5 billion. According to HSBC, SVB UK’s “tangible equity” is anticipated to be around £1.4 billion.
Customers of SVB UK can “continue to bank as usual,” Quinn added.
According to Chancellor Jeremy Hunt, the UK’s tech industry supports hundreds of thousands of people and is truly at the forefront of the global tech industry. I promised to protect the tech industry yesterday, and we have been working hard to keep our word and come up with a solution that will give SVB UK’s clients confidence.
Since several were unable to access some or all of their funds with Silicon Valley Bank UK, startups had to scramble for cash on Monday. Bosses had worried that they wouldn’t be able to pay bills or wages.
Hunt continued, “Today, the government and the Bank of England supported a private sale of Silicon Valley Bank UK, ensuring that client deposits are safeguarded and that they can conduct banking as usual without receiving any assistance from the taxpayer. I’m glad we got it sorted out so quickly.
