HSBC acquires SVB’s UK operation

HSBC has acquired the UK arm of Silicon Valley Bank (SVB) following the US parent’s collapse. The move secures the deposits of thousands of UK tech firms, who would have faced losing all but £85,000 of their deposits in the event of the bank’s insolvency. HSBC has paid £1 for the business, announcing the deal as effective “immediately”. It confirmed in a statement that all depositors’ money with SVB UK was safe as a result of the acquisition.

Piotr Pisarz, CEO of financial tech start-up, Uncapped, said the deal would provide relief to start-ups affected by the collapse. However, he added that the event had highlighted the “unhealthy situation” of half of UK start-ups banking with a single institution. Uncapped has been offering emergency funding to firms since Saturday, receiving hundreds of applications from UK and US firms by Monday, and is also offering bridge loans for working capital.

HSBC CEO Noel Quinn said the acquisition made “excellent strategic sense” for the bank’s UK business, adding that it would enhance HSBC’s ability to serve innovative and fast-growing firms. As of last Friday, SVB UK had loans of £5.5bn and deposits of around £6.7bn, with a pretax profit of £88m in its last fiscal year, ending December.

Following the announcement, HSBC’s London-listed shares fell and were 3.6% lower in morning trading. The Stoxx Europe 600 banking index also dropped 5.6%, tracking 42 EU and UK banks. Chancellor Rishi Sunak said there had been no systemic risk to the UK’s banking system, adding that it was “extremely secure and well-capitalised”.