HSBC on Monday announced a deal to buy the U.K. subsidiary of collapsed U.S. tech startup lender Silicon Valley Bank, following all-night talks.
HSBC reported that its ring-fenced subsidiary in the United Kingdom, HSBC UK Bank, has agreed to buy SVB U.K. for £1 ($1.21). The parent company’s assets and liabilities are not included in the transaction.
The purchase “strengthens our commercial banking brand and boosts our capacity to service creative and fast-growing enterprises, notably those in the technology and life sciences sectors, in the United Kingdom and worldwide,” according to HSBC Group CEO Noel Quinn.
“SVB U.K. customers may continue to bank as normal, confident that their savings are supported by HSBC’s strength, safety, and security.”
SVB U.K. had loans of roughly £5.5 billion and deposits of around £6.7 billion as of Friday, with £88 million in full-year profit before tax in 2022, according to HSBC’s Monday statement. SVB U.K.’s tangible equity is expected to be roughly £1.4 billion, according to the bank, but the “final computation of the gain deriving from the purchase will be revealed in due course.”
The transaction, brokered by the Bank of England in cooperation with the UK Treasury, would preserve SVB U.K. clients’ money, according to a statement from the Treasury.
British Finance Minister Jeremy Hunt emphasized that the agreement “ensures consumer deposits are secured and that customers can bank as usual, with no taxpayer assistance.”
“The United Kingdom’s technology industry is really world-leading and vital to the British economy, sustaining hundreds of thousands of employments,” he continued.
Toby Mather, CEO and co-founder of Lingumi, a startup children’s education platform, has been a customer of SVB for seven years, placing 85% of the company’s capital with the bankrupt lender.
According to him, the HSBC acquisition resulted in a “huge sigh of relief” for British entrepreneurs.