HSBC has signed off on a deal to acquire the Silicon Valley Bank’s United Kingdom arm for £1 and save the tech sector of the U.K.
The British multinational bank HSBC acquired the Silicon Valley Bank’s U.K. (SVB U.K.) arm for £1 ($1.21). The deal will help over 3,500 SVB U.K. customers secure over $8.1 billion of deposits.
Jeremy Hunt, the Chancellor of the Exchequer, tweeted that they worked urgently to look after the tech sector.
HSBC Rescues UK Tech Sector
According to the Guardian, the Bank of England said the deal would “minimize disruption to the U.K. technology sector and support confidence in the financial system.”
Whereas Noel Quinn, the Chief Executive Officer (CEO) of HSBC, 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.”
Richard Marwood, a senior fund manager at Royal London Asset Management, believes it is a good deal. He told Reuters, “SVB lacked liquidity and depositor confidence – HSBC has both of those in spades.”
The UK Government Distressed Over Weekend
The Bank of England and the government had a busy weekend solving the SVB problem.
Over the weekend, over 200 tech executives wrote an open letter to Jeremy Hunt. They warned that the loss of deposits would cripple the tech industry. Hunt said, “We were faced with a situation where we could have seen some of our most important companies – our most strategic companies – wiped out, and that would have been extremely dangerous.”
At the same time, the U.S. authorities will protect depositors and facilitate their access to the money on Monday. On March 10, regulators seized SVB, which has been described as the largest banking failure after 2008. After SVB, Federal Reserve closed Signature Bank, making it the second bank closure of the week.
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