HSBC Acquires Silicon Valley Bank UK with Customer Deposits Protected
HSBC has acquired the UK division of Silicon Valley Bank, which collapsed recently.
The UK government and Bank of England supported the private sale to protect customer deposits, and no public funds were used.
The US government intervened to prevent a possible banking crisis due to the failure of Silicon Valley Bank and the potential spread of the factors that led to its downfall.
According to Chancellor Jeremy Hunt, the UK arm of Silicon Valley Bank has been sold to HSBC with the government and Bank of England assisting in a private sale to safeguard all customer deposits without the use of taxpayer funds.
The acquisition will allow SVB UK customers to access their banking services and deposits as usual, with the added strength, safety, and security that comes with HSBC being Europe’s largest bank.
Fears that the failure of SVB could cause a ripple effect in the technology and life sciences industry have been quelled. The sale was made for a nominal sum of £1.
According to the Bank of England, SVB UK’s balance sheet was at £8.8 billion, with around £6.7 billion of deposits and £5.5 billion of loans as of last Friday.
Customers can still contact the bank through regular channels, and borrowers should make loan repayments as usual. However, the Bank of England determined that the severity of the liquidity and confidence decline meant that the situation was not salvageable, prompting consultation with the PRA, FCA, and HM Treasury to use resolution powers for stabilizing failing banks.
According to the Bank, all operations will remain unchanged at SVB UK and the bank’s entire staff will continue to be employed.
“Customers can contact SVB UK through their usual channels, and borrowers should make loan repayments to SVB UK as usual,” the Bank said.
Furthermore, the Bank stated that the UK banking system as a whole remains secure, stable, and adequately capitalized.