HSBC rebrands and expands

HSBC, which acquired SVB UK for a nominal fee of £1 during its crisis in March, has unveiled plans for a rebrand and expansion under its ownership. The banking giant has launched HSBC Innovation Banking, a new division specifically catering to the needs of startups, investors, and the wider tech community. This move comes as HSBC aims to tap into the fast-growing technology sector. The newly established unit, operating as a subsidiary of HSBC UK, will not only encompass SVB UK’s assets but will also include teams from the US, Israel, and Hong Kong, employing over 700 individuals. Initially, the focus will primarily be on UK-based customers, numbering around 3,000.

This development has sparked intense competition between former partners. First Citizens, which acquired SVB’s banking operations in the US, including deposits and loans worth $72 billion, is currently engaged in a lawsuit against HSBC. First Citizens accuses HSBC of poaching SVB staff, including high-ranking executives like David Sabow, who was previously the head of SVB in the US and will now lead HSBC Innovation Banking in the country. HSBC has also recruited the entire SVB Israel team, led by David Cohen, along with 20 additional members. It is likely that First Citizens anticipated this announcement and took legal action in response.

Erin Platts, formerly the head of SVB UK, has been appointed as the CEO of HSBC Innovation Banking UK, indicating her prominent role in leading the new venture. HSBC’s strategic move to enter the technology sector comes at a critical juncture, with the hope of capitalising on future market growth. In recent times, funding for tech companies has significantly declined, which was a contributing factor to SVB’s collapse. HSBC believes that launching this initiative during a quieter period, coupled with its financial strength and extensive global reach, will position them for substantial gains. The bank aims to support international growth for its clients operating in the technology, startup, and life sciences domains.

No specific details regarding the initial size of the business or its assets under management have been disclosed. However, HSBC’s acquisition of SVB UK included taking on loans of approximately £5.5 billion and deposits of around £6.7 billion. SVB UK reported a pre-tax profit of £88 million for the financial year ending on December 31, 2022, and HSBC estimated SVB UK’s tangible equity to be around £1.4 billion at the time of acquisition. HSBC’s Group Chief Executive, Noel Quinn, expressed confidence in the new venture, emphasizing the importance of the UK’s technology and life sciences sectors in boosting the economy and global exports. UK Prime Minister Rishi Sunak also praised the establishment of HSBC Innovation Banking, emphasising its potential to drive job creation and enhance the UK’s position as a technology and science powerhouse.

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