- HSBC paid a symbolic £1 for the acquisition, exclusive of the assets and liabilities of the parent lender.
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British banking giant HSBC has won the bid to acquire the UK subsidiary of the collapsed US lender Silicon Valley Bank for 1 pound ($1.21), excluding the assets and liabilities of the firm’s parent company, in a deal brokered by Prime Minister Rishi Sunak and the Bank of England.
The highly contested sale, which included bids from other British banks like OarNorth, and the Bank of London, would transfer a loan book of £5.5 billion and £6.7 billion in deposits to HSBC, and an estimated tangible equity of £1.4 billion, according to a statement from BoE.
“The Bank of England, in consultation with the Prudential Regulation Authority HM Treasury, and Financial Conduct Authority, has decided to sell Silicon Valley Bank UK, the UK subsidiary of the US bank. (The) action has been taken to stabilize SVBUK, ensuring the continuity of banking services, minimizing disruption to the UK technology sector, and supporting confidence in the financial system,” BoE said.
A relief to SVBUK’s startup customers
BoE’s step greatly relieved startup companies in the UK, most of which depended on SVBUK for their banking needs, according to Andrew Griffith, the economic secretary with the UK Treasury, who stressed that the tech sector remains critical in the country.
The terms of the deal allow HSBC’s UK subsidiary to fully finance the acquisition of Silicon Valley Bank UK Limited, which will reportedly be completed immediately and excludes all the assets and liabilities of SVB’s parent company. BoE assured the investors that no other financial institution was directly materially affected by the acquisition of SVBUK by HSBC, comments echoed by Prime Minister Sunak.
On Friday, the California Department of Financial Protection and Innovation closed SVB and appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver. With an estimated $200 billion in assets and $175 billion in deposits, the SVB collapse marked a significant implosion in the US banking sector since the 2008 financial crisis, with the most impact in the digital asset space. SVB was the go-to firm for most professional firms, including notable digital assets venture capital firms such as A16z and Sequoia Capital.
Biden’s administration has intervened to protect the depositors of SVB, announcing that all the depositors of SVB would access their funds Monday, a step aimed at averting a crisis in the US financial systems.
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