UK branch of SVB sold to HSBC for £1

UPDATE DAY

The UK arm of bankrupt California bank Silicon Valley Bank (SVB) has been sold to UK banking giant HSBC for a token £1, according to simultaneous statements from the UK Treasury, Bank of England and HSBC on Monday. 

The transaction, financed from HSBC's “existing resources”, was orchestrated by the Bank of England, in coordination with the Treasury and UK banking and market regulators.

“Customers of SVB UK will be able to access their deposits and banking services as normal from today,” the Treasury said in its statement.

UK Finance Minister Jeremy Hunt said the operation took place “without taxpayer support”.

“HSBC is the biggest bank in Europe and customers of SVB UK should feel reassured by its solidity,” he added.

The Minister was pleased to have “reached a solution in such a short time”, at the end of a weekend of meetings and negotiations, in particular with the technology sector while many companies in this sector were SVB customers and feared a sudden drying up of their cash.

Mr. Hunt had admitted this weekend a “serious risk” for this sector.

As of March 10, SVB UK held loans of around £5.5 billion and deposits of around £6.7 billion, according to HSBC, which says “the assets and debts of the houses mothers of SVB UK are excluded from the transaction.”

The American authorities for their part announced on Sunday a series of measures to reassure individuals and businesses about the solidity of the American banking system. In particular, they will guarantee the withdrawal of all deposits from the bankrupt SVB bank.

In addition to SVB, they will allow access to all the deposits of another establishment, Signature Bank, which was automatically closed by the regulator, to everyone's surprise.

The Federal Reserve (Fed ) – the US central bank – has also undertaken to lend the necessary funds to other banks that may need them to honor withdrawal requests from their customers.

The acquisition of SVB UK by HSBC “makes very good strategic sense for the UK. It strengthens our commercial banking and improves our ability to serve high-growth and innovative businesses, including in technology and biotechnology, in the UK and internationally,” said Noel Quinn, chief executive of HSBC. .

“The White Knights come to the rescue after a weekend of intense negotiations to avoid a contagion effect following the bankruptcy of SVB, which sent shock waves through the financial and technology sectors “Commented Susannah Streeter, analyst at Hargreaves Lansdown.

She also notes that the sale of SVB to HSBC removes a thorn from the side of Downing Street in the middle of the budget presentation week – scheduled for Wednesday.

“A tech bailout wouldn’t have looked very good when millions of people were told there wasn’t much money left to help them a severe crisis in the cost of living,” she added.

HSBC lost 2.97% to 575 pence on Monday around 9 a.m. GMT on the London Stock Exchange, in a market down 1.68% to 7,618.43 points.