HSBC acquires Silicon Valley Bank's UK arm for US$1.25

HSBC's UK ring-fenced subsidiary, HSBC UK Bank, is acquiring the UK division of collapsed tech startup lender Silicon Valley Bank (SVB) for US$1.25 (£1), saving deposits of British tech firms that hold money at the lender. 

This came as the SVB was closed on 10 March by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. According to the FDIC, all insured depositors of SVB will have full access to their insured deposits no later than the morning of 13 March. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of SVB, future dividend payments may be made to uninsured depositors.

As at 10 March, SVB UK had loans of around US$6.89bn and deposits of around US$8.4bn. For the financial year ending 31 December 2022, SVB UK recorded a profit before tax of US$110m. SVB UK’s tangible equity is expected to be around US$1.75bn. Final calculation of the gain arising from the acquisition will be provided in due course. The assets and liabilities of the parent companies of SVB UK are excluded from the transaction. The transaction completes immediately. The acquisition will be funded from existing resources, according to HSBC's official statement.

Noel Quinn, HSBC Group CEO, said, “This acquisition makes excellent strategic sense for our business in the UK. It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally.

“We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world. SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC. We warmly welcome SVB UK colleagues to HSBC, we are excited to start working with them,” Quinn added.

MARKETING-INTERACTIVE has reached out to HSBC for further information.

Don't miss: Over 10 Hong Kong-listed firms say their deposits at SVB are immaterial

Most recently, over 10 Hong Kong-listed companies have declared that the shutdown of Silicon Valley Bank (SVB) has no material adverse effect on them as their deposits at the bank are immaterial. These companies include Brii Biosciences(騰盛博藥), CANbridge Pharmaceuticals(北海康成製藥), Everest Medicines(雲頂新耀), Genor BioPharma(嘉和生物藥業), Jacobio Pharmaceuticals(加科思藥業), New Horizon Health(諾輝健康), Sirnaomics(聖諾醫藥), CStone Pharmaceuticals(基石藥業), Broncus Medical(堃博醫療), BeiGene (百濟神州) and Mobvista(匯量科技), of which most of them are Chinese pharmaceutical firms.

On the other hand, a Shenzhen-listed medical firm the company's cash and financial assets are diversified to minimise risks. As of 10 March, the deposit amount of the company and its subsidiaries at SVB, accounted for 5% of the company's total cash and financial assets. In addition to its deposits at SVB, the company's remaining cash and assets are deposited at systemically important financial institutions such as Morgan Stanley, ICBC, JPMorgan Chase, UBS, and Goldman Sachs. These assets are currently safely stored.

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