HSBC steps in to save UK arm of failed tech lender Silicon Valley Bank
HSBC has stepped in to buy the UK arm of Silicon Valley Bank, the tech sector lender that was shut down by US regulators at the end of last week.
SVB UK, whose clients include start-ups and venture-backed companies, is a key lender to UK tech and life sciences businesses and has around 3,300 British clients on its books.
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt led talks to save the unit from collapse after a run on its US parent prompted by reported losses led to it being shut down.
HSBC has taken over the UK business with immediate effect, taking responsibility for its £5.5bn loan book and £6.7bn of deposits.
HSBC chief executive Noel Quinn said the acquisition makes “excellent strategic sense for our business in the UK”, adding that it will strengthen the bank's commercial banking franchise and enhance its ability to “serve innovative and fast-growing firms, including in the technology and life-science sectors”.
“We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world,” he said.
“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.”
Though both the Treasury and Bank of England were involved in securing the transaction, no taxpayer money was involved in the deal, which is understood to have been sealed for a token £1.
Hunt said the government had stepped in to help facilitate the deal to “look after our tech sector”, which is “of huge importance to the British economy, supporting hundreds of thousands of jobs”.
He said the deal “ensures customer deposits are protected and [that clients] can bank as normal, with no taxpayer support”.
“I am pleased we have reached a resolution in such short order,” he added.
Founded in 1983 by former Bank of America managers, Silicon Valley Bank’s focus had always been on lending to start-up technology companies.
It ran into trouble after higher interest rates made it harder for clients to raise money through private fundraisings or share sales, leading many to withdraw their deposits.
The bank began selling assets to try to keep up with the withdrawals but was unable to raise enough money to plug that gap and was placed into receivership by the California Department of Financial Protection and Innovation.