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In one of the most absurd sounding news in the FinTech market lately, HSBC Holdings Plc has bought Silicon Valley Bank’s United Kingdom arm for a grand sum of 1 pound. Yes – 1 Great Britain Pound. It was publicly announced on March 13th that HSBC’s UK ring-fenced subsidiary, which is Europe’s biggest bank – HSBC UK Bank Plc – has successfully acquired the doomed SVB’s UK arm, which was roughly around £5.5 billion in debt. Following recent events, where Silicon Valley Bank suffered large stock market crashes to be eventually shut down by US regulators, this move brings about a lot of security to companies that relied in SVB UK.
Finance Minister Comments on the Situation
Silicon Valley Bank is a major player in technological firms and startups, and even though its UK sector is comparatively smaller with around 3000 customers, a collapse in the same would have been a huge risk to Britain’s tech sector, and hence its economical growth. A risk huge enough to draw a statement from Britain’s finance minister, Mr. Jeremy Hunt himself.
He emphasised on how SVB UK customers should now feel secure and reassured by the safety Europe’s largest bank brings them. He further added on how dire the situations were – which could have seen most of their strategic partners wiped out – had HSBC not stepped in. He also spoke about how the finance ministry’s main priority had been to prevent using British taxpayers’ money.
A Statement from HSBC’s CEO
HSBC’s CEO, Mr. Noel Quinn, spoke about how this acquisition was a great step for their UK based business strategically, strengthening their commercial banking franchise and increasing their scope in technology and life-science sectors – both domestically in the UK and abroad.
A Competitive Bidding for the Deal
HSBC was not the only buyer though – there were quite a few in contention, as this deal was the government’s preferred solution to this problem. Some of the other contenders were Bank of London Group Ltd., Royal Group (Abu Dhabi royal-controlled investment firm) and SoftBank Group Corporation’s OakNorth Bank.
Bank of England was the one that facilitated this deal, and they reiterated that no taxpayer money was involved in the same, and the potential clients for this deal had all been part of conference calls with Bank of England, following which HSBC and Noel Quinn had emerged to be victorious in bagging this deal. Quinn had reportedly been on call with BoE overnight to achieve the same. Several important people were involved in this rescue mission – incuding newly sworn in Prime Minister Rishi Sunak, BoE governer Andrew Bailey, Prudential Regulation Authority’s Sam Woods and Andrew Griffith, the minister of Hunt and City.
Other Details About the Acquisition
Silicon Valley Bank UK was in roughly 5.5 billion pounds of debt, and had deposits worth approximately 6.7 billion pounds, with a total balance sheet size of estimated 8.8 billion dollars. In comparison, HSBC has approximately USD 2.9 trillion dollars in assets, making it one of the world’s biggest banks. However, it is important to note here that SVB UK’s assets and liabilities shall not be a part of this transaction, and they shall be excluded in all talks, while the transaction completes immediately.
