The government and HSBC revealed on Monday that the UK division of the bankrupt US lender Silicon Valley Bank has been sold to HSBC for a pittance of £1 ($1.2) as part of a rescue agreement.
The agreement was made after SVB’s failure on Friday, which caused concern in Britain regarding its clients in the technology and life science sectors. It was supervised by the Bank of England and the Treasury.
“Silicon Valley Bank (UK) Ltd has today been sold to HSBC,” said a Treasury statement after urgent talks over the weekend.
“This transaction has been facilitated by the Bank of England, in consultation with the Treasury, using powers granted by the Banking Act 2009.”
No government funds were involved, and all client deposits were protected, the finance minister Jeremy Hunt confirmed.
“This (deal) ensures customer deposits are protected and can bank as normal, with no taxpayer support.
“I am pleased we have reached a resolution in such short order,” added Hunt.
The bank behemoth further stated in a separate statement that HSBC has agreed to pay just £1 for the company.
The lender with an emphasis on Asia further stated that SVB UK has deposits totaling roughly £6.7 billion and loans of about £5.5 billion.
“This acquisition makes excellent strategic sense for our business in the UK,” said HSBC chief executive Noel Quinn.
“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 added that SVB UK’s customers “can continue to bank as usual” and will be “safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC”.
SVB, a company established in California, folded after its clients, mostly in the tech industry, made sizable withdrawals and after its most recent attempt to secure new capital was unsuccessful.
Its failure ranks as the second-largest US retail bank failure and the worst bank failure since Washington Mutual in 2008.
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