Following the takeover of Silicon Valley Bank by the United States Federal Deposit Insurance Corporation (FDIC) over the weekend, SVB’s UK subsidiary has been acquired by HSBC Holdings plc, a British multinational universal bank, and financial services holding company, for £1.
SVB Customers Can Now Bank Through HSBC
According to the announcement, SVB UK had loans of around £5.5 billion and deposits of around £6.7 billion as of March 10, 2023.
Reportedly, SVB UK recorded a profit before tax of £88 million for the financial year ending 31 December 2022. HSBC Holdings noted that SVB UK’s tangible equity is expected to be around £1.4 billion. As such, the final calculation of the gain arising from the acquisition will be provided later.
Noel Quinn, HSBC Group CEO, said the SVB UK acquisition makes excellent strategic sense for its business in the United Kingdom. Moreover, the acquisition strengthens its commercial banking franchise and enhances its ability to serve innovative and fast-growing firms in the country.
“We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world. SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety, and security of HSBC. We warmly welcome SVB UK colleagues to HSBC, we are excited to start working with them,” Quinn noted.
Quick Interventions From UK and US Governments Save SVB
Less than three days following the collapse of Silicon Valley Bank, which mostly serviced businesses and high-net-worth customers, the United States federal government and the UK administration have swiftly stepped in to save the banking crisis. While the Biden administration has pledged $25 billion to bolster SVB banking operations, the UK government, through Chancellor Jeremy Hunt, announced it was looking into the matter to avoid damage to promising companies in the market.