HSBC on Monday said it is acquiring the UK subsidiary of Silicon Valley Bank for 1 pound.
“This acquisition makes excellent strategic sense for our business in the UK,” HSBC CEO Noel Quinn said in a statement.
As per a Reuters report, the move comes after the US authorities moved to shore up deposits and stem any wider fallout from the sudden collapse of its parent, tech startup lender Silicon Valley Bank (SVB).
As of March 10, Silicon Valley Bank UK Limited had loans of around 5.5 billion pounds and deposits of around 6.7 billion pounds, HSBC said. SVB UK’s tangible equity is expected to be around 1.4 billion pounds.
The transaction completes immediately and will be funded from existing resources, the bank added.
UK Chancellor Jeremy Hunt announced the decision on microblogging site Twitter, saying, “This morning, the government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC. Deposits will be protected, with no taxpayer support.”
“I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise.”
California-based Silicon Valley Bank, the 16th largest bank in the United States, was closed on Friday by the California Department of Financial Protection and Innovation, which later appointed the FDIC as its receiver.
Hours after regulators shuttered SVB on Friday in the biggest US bank failure since 2008, the Bank of England (BoE) announced it would have to put the group’s separate UK banking unit into insolvency, sparking the weekend sales process.
As a major relief to startups and entities, the US administration had announced that depositors of failed Silicon Valley Bank will have access to their money from March 13.
“The depositors will have access to all their money starting Monday, that is, March 13. No losses associated with the resolution of the Silicon Valley Bank (SVB) will be borne by the taxpayer,” said a joint statement issued by the Department of the Treasury, Federal Reserve, and FDIC.
”This step will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the joint statement said.
Under the plan, depositors at Silicon Valley Bank and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money on Monday, The Associated Press reported.
According to the interagency federal statement, shareholders and certain unsecured debt holders, however, will not be protected.
The abrupt collapse of the SVB has left Silicon Valley entrepreneurs, including India-based firms, unnerved and jittery. It has also pushed tech investors and startups to scramble to figure out their financial exposure and the impact on their ability to operate, at a time when many businesses were already on edge from widespread layoffs.
Seeking to ward off the impact on Indian enterprises, Minister of State for Electronics and IT Rajeev Chandrasekhar on Sunday said that he will meet representatives of startups this week to assess the impact of their exposure to Silicon Valley Bank, which was deeply entrenched in the tech startup ecosystem.
According to various industry players and experts, most Indian software-as-a-services (SaaS) startups with a presence in the US and firms linked to incubator Y Combinator are among entities that will feel the heat of the Silicon Valley Bank collapse but the impact is likely to be short-term.
“The SVB_Financial closure is certainly disrupting startups across the world. Startups are an imp part of NewIndia Economy. I will meet with Indian Startups this week to understand the impact on them n how @narendramodi govt can help during this crisis,” Chandrasekhar tweeted on Sunday.
(With inputs from PTI)
