HSBC Holdings To Acquire US-Based Silicon Valley Bank's UK Arm For £1

Ministers and officials had spent the weekend drawing up plans to ringfence the UK’s technology and life sciences industries, following warnings that they would be crippled without intervention

HSBC Holdings is set to acquire the UK arm of Silicon Valley Bank (SVB) following the collapse of the US-based bank, news agency Bloomberg reported on Monday. According to the report, the London-listed lender’s "ring-fenced subsidiary, HSBC UK Bank, is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1," HSBC said in a statement on Monday.

According to the report, Chief Executive Officer (CEO) Noel Quinn said, "This acquisition makes excellent strategic sense for our business in the UK. 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."

Ministers and officials had spent the weekend drawing up plans to ringfence the UK’s technology and life sciences industries, following warnings that they would be crippled without intervention. Though small compared to the UK’s largest banks, SVB has an outsized role in the world of start-ups, describing itself as "the go-to banking partner for founders, entrepreneurs and investors."

A host of lenders were mooted as possible buyers, with such a deal the preferred solution of the government. Nascent clearing bank Bank of London Group Ltd. said on Sunday that it submitted a formal proposal to the Treasury, Bank of England and the board of SVB UK.

Royal Group, an investment firm controlled by a top Abu Dhabi royal, and SoftBank Group Corp-backed lender OakNorth were also among those considering a takeover, Bloomberg reported on Sunday. Another plan was for lenders to take on depositors from SVB Financial Group’s British arm.

Under the plan, several big banks would have taken on SVB’s depositors, offering them access to money until their funds are released from the lender. The leaders of roughly 180 tech companies had said in an open letter to Hunt seen by Bloomberg that the loss of deposits at SVB would have the potential to cripple the sector and set the ecosystem back 20 years. "This is an urgent matter. Help is needed by tomorrow," Michael Moore, director general of the British Private Equity and Venture Capital Association said, before the Treasury’s intervention. "Long-term support will be required to protect the UK’s innovators, entrepreneurs and funders."

The announcement comes after US financial regulators moved on Sunday to assure all depositors their money is safe following the collapse of Silicon Valley Bank and set up a new lending program offered by the Federal Reserve with funds from the Treasury Department.