HSBC has bought the UK arm of collapsed Silicon Valley Bank (SVB) after the Government and Bank of England stepped in to “facilitate” a private sale.
The Government said the buyout “ensures customer deposits are protected and can bank as normal, with no taxpayer support”.
Silicon Valley Bank, a leading tech-focused bank that is heavily involved in financing start-up firms, was shut down in the US on Friday and its British arm was set to be wound up over the weekend.
Its collapse sent shockwaves across the banking and technology industries, hitting thousands of companies.
In a statement, Chancellor Jeremy Hunt said: “The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs.
“I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.”
The Bank of England insisted in a statement that all deposits are “safe and secure” following the sale. It announced the deal this morning after talks which also included the Prudential Regulation Authority, the Treasury and the Financial Conduct Authority.
“The Bank and HMT [the Treasury] can confirm that all depositors’ money with SVB UK is safe and secure as a result of this transaction,” it said.
“SVB UK’s business will continue to be operated normally by SVB UK. All services will continue to operate as normal and customers should not notice any changes.”
The move will calm many in the sector, amid fears that the collapse of the bank could affect the wider technology industry in the UK.
The sale to HSBC was reportedly completed for just £1, with HSBC chief executive Noel Quinn telling shareholders it “enhances our ability to serve innovative and fast-growing firms”.
While SVB is a relatively small bank in the UK market, it has served as the bank of choice for many start-ups, and has described itself as “the go-to banking partner for founders, entrepreneurs and investors”.
HSBC also issued a statement outlining SVB UK’s financial status, saying it had loans of about £5.5bn and deposits of around £6.7bn, and had recorded an £88m profit before tax last year.
The collapse of SVB in the US came after the bank announced it had to take on a $1.8bn loss on the sale of its bond deposits in order to meet its liabilities.
The announcement spooked many investors, with customers attempting to withdraw around $42bn in deposits on Thursday.
The bank’s share price fell by 60 per cent as a result and trading in its shares was stopped altogether on Friday ahead of US regulators stepping in.