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HSBC’s announcement came at a time the United States government announced a $25 billion bailout of struggling Silicon Valley Bank and Signature Bank to avoid a further banking crisis.
In a stunning turn of events, HSBC Holdings Plc (NYSE: HSBC) has announced that its United Kingdom subsidiary has acquired troubled Silicon Valley Bank (SVB) UK Limited for £1. According to the announcement, the assets and liabilities of the parent companies are excluded from the transaction, which was funded from the company’s existing resources. How the transaction only came to £1 is yet to be fully explained by HSBC UK or its officials. Nonetheless, the move is viewed as a rescue for the banking industry in the United Kingdom, as SVB has been serving critical sectors of the economy.
According to UK’s Chancellor Jeremy Hunt, the country needed to move swiftly on the matter of SVB to avoid damage to its promising companies. Moreover, the Bank of London had previously submitted a proposal to acquire the SVB UK assets in a strategic move.
“Silicon Valley Bank cannot be allowed to fail given the vital community it serves. This is a unique opportunity to ensure the UK has a more diversified banking sector whilst allowing continuity of service to SVB’s UK client base,” Bank of London co-founder and CEO Anthony Watson noted in a statement.
HSBC Wins Bid to Acquire SVB UK Assets
HSBC’s announcement came at a time the United States government, through the Biden administration, announced a $25 billion bailout of struggling Silicon Valley Bank and Signature Bank to avoid a further banking crisis. According to the HSBC announcement, SVB UK had loans of around £5.5 billion and deposits of around £6.7 billion as of March 10.
Additionally, the British multinational universal bank and financial services holding company noted that SVB UK recorded a profit before tax of £88 million during the financial year ending 31 December 2022. As such, HSBC noted that SVB UK’s tangible equity is expected to be around £1.4 billion.
Noel Quinn, HSBC Group CEO, said that the acquisition of SVB UK makes excellent strategic sense for its business in the United Kingdom. Moreover, the acquisition strengthens the company’s commercial banking franchise and enhances its 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,” Quinn noted.