HSBC acquires Silicon Valley Bank UK for £1

The deal rescues a bank with loans of around £5.5bn and deposits of around £6.7bn—and comes despite Silicon Valley Bank UK recording a profit before tax of £88m

HSBC Bank has struck a deal to buy the UK arm of Silicon Valley Bank, a key banking partner of technology startups on both sides of the Atlantic, for £1.

The deal, which was facilitated by the UK government, rescues a bank with loans of around £5.5bn and deposits of around £6.7bn—and comes despite Silicon Valley Bank UK recording a profit before tax of £88m for the financial year ending 31 December 2022.

The US parent company ran into trouble last week due to a shortfall on its balance sheet amid rising interest rates. Both were then placed into receivership/insolvency.

The US Federal Deposit Insurance Corporation (FDIC) is acting as receiver in the US and has set up a temporary bank to continue serving depositors.

In the US, Silicon Valley Bank had 17 branches in California and Massachusetts, all of which will open as normal today so that business can resume.

According to the FDIC, Silicon Valley Bank had approximately $209 billion in total assets and about $175.4 billion in total deposits, as of 31 December 2022. Regulators have stressed that depositors will have access to all of their funds.

The UK rescue deal and the steps taken by regulators in the US to protect clients—many of them tech startups and venture capital firms—will come as a relief to the fintech sector.

Innovate Finance has put together a useful resources page detailing fintechs that are able to step in and support companies affected by the collapse.

Noel Quinn, chief executive officer of HSBC Group, moved to reassure Silicon Valley Bank UK customers in his comments on the acquisition. He 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 Silicon Valley Bank UK’s customers to HSBC and look forward to helping them grow in the UK and around the world.

“[They] can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC.”

Image source: Canva

Mark Dugdale