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HSBC acquires Silicon Valley Bank's UK unit for £1

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HSBC Holdings Plc on March 13 announced that its UK ring-fenced subsidiary, HSBC UK Bank plc, is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1. SVB UK had loans of around £5.5 billion and deposits of around £6.7 billion as on March 10, 2023.

For the financial year ending December 31, 2022, SVB UK recorded a profit before tax of £88 million. SVB UK's tangible equity is expected to be around £1.4 billion. The final calculation of the gain arising from the acquisition will be provided in due course. The assets and liabilities of the parent companies of SVB UK are excluded from the transaction. The transaction completes immediately. The acquisition will be funded from existing resources, HSBC said in a statement.

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.”

Bank of England (BoE) in a separate statement that it facilitated the deal, and that customer deposits will be protected and no taxpayer money is involved in the deal

People briefed on the negotiations said potential bidders held conference calls with the BoE through the night.

By 6 am, HSBC had emerged as the leading white-knight bidder for SVB UK, with Noel Quinn, the bank’s chief executive, involved in the overnight talks.

The extraordinary overnight rescue mission involved UK Prime Minister Rishi Sunak, Hunt and City minister Andrew Griffith, while Andrew Bailey, Bank of England governor, and Sam Woods of the Prudential Regulation Authority were also involved.

One person briefed on the haggling over the future of SVB UK said it was a “fully competitive” process with multiple parties interested in taking over the stricken bank. Sunak, in California for a defence summit with leaders of the US and Australia, was said to have been “very hands on” overnight.

The government spent the weekend racing to try to sell SVB UK and put together a backup plan to support companies that have deposits trapped in the lender. US regulators on Sunday evening said that SVB’s American depositors would have access to all of their money on Monday.