The Bank of England has sold the UK subsidiary of Silicon Valley Bank to HSBC, it confirmed this morning.
In a statement the bank said: “This action has been taken to stabilise SVBUK, ensuring the continuity of banking services, minimising disruption to the UK technology sector and supporting confidence in the financial system.”
All depositors’ money with SVBUK is safe and secure as a result of this transaction. SVBUK’s business will continue to be operated normally by SVBUK. All services will continue to operate as normal and customers should not notice any changes.
“SVBUK staff remain employed by SVBUK, and SVBUK continues to be a PRA/FCA authorised bank.”
It added: “No other UK banks are directly materially affected by these actions, or by the resolution of SVBUK’s US parent bank. The wider UK banking system remains safe, sound, and well capitalised.”
HSBC said SVB UK had loans of around £5.5billion and deposits of around £6.7 billion as at 10 March 2022. For the financial year ending 31 December 2022, SVB UK recorded a profit before tax of £88 million. HSBC said the deal was funded from existing resources. It bought SVP for £1.
Noel Quinn, HSBC Group CEO, said, “This acquisition makes excellent strategic sense for our business in the UK. 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.
“We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world. 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. We warmly welcome SVB UK colleagues to HSBC, we are excited to start working with them.”
The announcement of the deal is likely to come as a relief to UK tech sector, as many as 30% of whom had accounts with SVB, according to internal Treasury estimates.
Many tech startups bank exclusively with SVB, meaning that without an intervention they would not have enough cash to keep going for more than a few days at best.
Matt Clifford, co-founder of venture capital business Entrepreneur First, said on Saturday morning: “[The] most common phrase in my inbox right now is ‘we can’t make payroll with the insured amount’.”
He told the Standard: “The core question is just what happens to those who can’t access to money they need. A bunch of them will not make payroll and a bunch of them will go under.
“If depositors can’t access funds, the startup ecosystem is decimated.”
Responding to the HSBC deal, Dom Hallas, executive director of tech policy nonprofit Coadec, said: “The government deserves huge credit. From the very top, to HM Treasury who understood the challenge and gripped it, to the huge number of civil servants who have likely not slept since Friday.
“They have saved hundreds of the UK’s most innovative companies today.”
