Rs. 99.26: This is what HSBC is paying to acquire broke SVB’s UK branch!
Virendra Pandit
New Delhi: In a technology reprieve, HSBC Holdings Plc is buying the bankrupt Silicon Valley Bank’s UK arm for a princely sum of £1 (Rs. 99.26), the media reported on Monday.
The London-listed US lender’s “ring-fenced subsidiary, HSBC UK Bank plc, is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1,” HSBC said in a statement on Monday.
This is the culmination of a frantic weekend where ministers and bankers explored various ways to avert the SVB UK’s collapse.
“This acquisition makes excellent strategic sense for our business in the UK,” Chief Executive Officer Noel Quinn said. “SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety, and security of HSBC.”
Last weekend, ministers and officials drew up plans to ringfence the UK’s technology and life sciences industries, following warnings that, without intervention, they would be crippled. Although small compared to the UK’s largest banks, SVB has an outsized role in the startup ecosystem, priding itself as “the go-to banking partner for founders, entrepreneurs, and investors.”
Several suitors were mooted as possible buyers. Nascent clearing bank, Bank of London Group Ltd. said in a statement on Sunday that it submitted a formal proposal to the Treasury, Bank of England, and the board of SVB UK. Royal Group, an investment firm controlled by a top Abu Dhabi royal, and SoftBank Group Corp.-backed lender OakNorth were also among those considering to takeover of SVB-UK, the reports said.
Another plan was for lenders to take on depositors from SVB Financial Group’s British arm. Accordingly, several big banks would have taken on SVB’s depositors, offering them access to the money until their funds are released from the California-based lender.
The leaders of nearly 180 technology companies said the loss of deposits at SVB would have the potential to cripple the sector and set the ecosystem back 20 years.
“This is an urgent matter. Help is needed by tomorrow,” Michael Moore, Director-General of the British Private Equity and Venture Capital Association said, before the Treasury’s intervention. “Long-term support will be required to protect the UK’s innovators, entrepreneurs, and funders.”
The announcement comes after US financial regulators moved on Sunday to assure all depositors their money is safe following the SVB’s collapse and set up a new lending program offered by the Federal Reserve with funds from the Treasury Department.
