HSBC has bought the UK arm of Silicon Valley Bank (SVB) after fears the tech-focused lender would collapse. The deal was facilitated by the Bank of England (BoE) and the UK Government.
SVB was on the brink of collapse after it suffered a liquidity crisis due to money being tied up in long-term, low-risk bonds. Its situation became dire news of its situation caused a run on its deposits.
The US bank focused heavily on the tech sector, meaning many tech businesses were at risk of losing their deposits. But today the Government announced that a deal had been made to save the UK arm of SVB.
In a tweet, Chancellor Jeremy Hunt said: “This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC. Deposits will be protected, with no taxpayer support. I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise.”
He later said in a statement: “The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs. I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.
“Today the Government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support. I am pleased we have reached a resolution in such short order.
“HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”
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Despite the deal being facilitated by the UK Government, Mr Hunt assured the public that no taxpayer funds had been used to purchase the bank. The Bank of England also confirmed that deposits at the bank were now "safe and secure".
The BoE said: “The Bank of England, in consultation with the Prudential Regulation Authority, HM Treasury (HMT) and the Financial Conduct Authority, has taken the decision to sell Silicon Valley Bank UK Limited (SVBUK), the UK subsidiary of the US bank, to HSBC UK Bank Plc. HSBC is authorised and supervised by the PRA and the FCA.
“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. The Bank and HMT can confirm that 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.
“Customers can continue to contact SVBUK through the usual channels and borrowers should make any loan repayments to SVBUK as normal. SVBUK staff remain employed by SVBUK, and SVBUK continues to be a PRA/FCA authorised bank.”
