HSBC announced on Monday its acquisition of the UK arm of Silicon Valley Bank (SVB) for a nominal price of £1, rescuing a key lender for tech startups in the UK.
Noel Quinn, CEO of HSBC, highlighted the strategic value of the acquisition, stating, “This acquisition makes excellent strategic sense for our business in the UK.”
The deal follows efforts by U.S. authorities to secure deposits and prevent broader financial fallout from the sudden collapse of SVB, the parent company focused on lending to tech startups.
Following the acquisition, the Bank of England assured that the UK’s banking system remains secure and well-capitalized, adding, “No other UK banks are directly, materially affected by these actions, or by the resolution of SVBUK’s U.S. parent bank.”
HSBC clarified that SVB UK is ringfenced from the U.S. group, and the assets and liabilities of SVB’s parent company are excluded from this acquisition.
The agreement concluded a weekend of intense negotiations involving the government, regulators, and potential buyers for SVB UK.
As of March 10, SVB UK had loans totaling approximately £5.5 billion and deposits of around £6.7 billion, according to HSBC.
SVB UK’s tangible equity is expected to be roughly £1.4 billion, and the transaction was completed immediately.
Unlike the U.S., the UK has not announced any broader liquidity measures for its banking system following the collapse.
Noel Quinn emphasized the benefits of the acquisition, stating, “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.”
He welcomed SVB UK’s customers to HSBC, assuring them that their deposits are protected by HSBC’s robust financial position. “We warmly welcome SVB UK colleagues to HSBC, we are excited to start working with them,” Quinn added.
HSBC plans to provide further details on the acquisition to its shareholders during its Q1 2023 results announcement on May 2, 2023.
