The collapse of the US bank Silicon Valley Bank (SVB) HSBC has bought its UK subsidiary, SVB UK, for £1. Customers and businesses who have deposited funds into SVB UK will have normal access. Taxes were irrelevant.
“Continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC”.
HSBC CEO Noel Quinn,
Besides HSBC, potential buyers of SVB UK included JP Morgan, Lloyd’s, digital financier Oaknorth Bank, two-year-old Bank of London and ADQ, a fund backed by the Abu Dhabi government.
The US government ensures that SVB US customers have access to cash on Monday morning.
Apparently, SVB’s U.S. parent invested $80 billion of customer cash in mortgage-backed securities, which averaged 1.56% yield, but fell in value when the Fed hiked interest rates, making government bonds more attractive. has become an investment target.
Customers are said to have started withdrawing funds and closing SVB accounts in December last year, and from April 2022 to January 2023, SVB, which had no chief risk officer, was forced to sell securities at a loss to meet its obligations. When the bank realized it had to sell the securities, the value of the securities fell below its obligation and the bank was technically insolvent.
Things took a turn for the better when the VC instructed the portfolio company to switch bank accounts from his SVB to a larger bank.
“This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC Deposits will be protected, with no taxpayer support I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise,”
“There is a serious risk to our technology and life sciences sectors,”
“happens to look after the money of some of our most promising and exciting businesses and so I want to reassure people.”
‘We are working at pace on a solution. We will bring forward very soon plans to make sure people are able to meet their cashflow requirements, pay their staff,”
“but obviously what we want to do is to find a longer-term solution that minimises or even avoids completely losses to some of our most promising companies.”
UK chancellor Jeremy Hunt.