The UK arm of collapsed US lender Silicon Valley Bank has been bought by HSBC.
The government and Bank of England stepped in to “facilitate” a private sale, with Chancellor Jeremy Hunt confirming that all customer deposits have been protected under the deal, with no taxpayer cash involved.
It comes after the US government moved to stop a potential banking crisis after the historic failure of Silicon Valley Bank, with all deposits protected, amid fears that the factors that caused the Santa Clara, California-based bank to fail could spread.
Hunt said: “Today the Government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK. This ensures customer deposits are protected and can bank as normal, with no taxpayer support.
“I am pleased we have reached a resolution in such short order. HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”
HSBC and the Treasury said customers of SVB UK will be able to access their deposits and banking services as normal following the sale to HSBC for a nominal sum of £1.
In a statement, the Bank of England said: “The Bank of England (Bank), in consultation with the Prudential Regulation Authority (PRA), HM Treasury (HMT) and the Financial Conduct Authority (FCA), has taken the decision to sell Silicon Valley Bank UK Limited (‘SVBUK’), the UK subsidiary of the US bank, to HSBC UK Bank Plc (HSBC). HSBC is authorised and supervised by the PRA and the FCA.
“This action has been taken to stabilise SVBUK, ensuring the continuity of banking services, minimising disruption to the UK technology sector and supporting confidence in the financial system.
“The Bank and HMT can confirm that all depositors’ money with SVBUK is safe and secure as a result of this transaction. SVBUK’s business will continue to be operated normally by SVBUK. All services will continue to operate as normal and customers should not notice any changes.
“Customers can continue to contact SVBUK through the usual channels and borrowers should make any loan repayments to SVBUK as normal. SVBUK staff remain employed by SVBUK, and SVBUK continues to be a PRA/FCA authorised bank.”
What is Silicon Valley Bank UK?
SVBUK is a subsidiary of Silicon Valley Bank and was the first location it opened outside the US.
There had been concerns that the collapse of SVB – the second-largest bank failure in history – could have sent shockwaves through the technology and life sciences sector in the UK, with many of those firms customers of the bank’s British business.
SVB UK had around £6.7 billion of deposits and loans of about £5.5 billion as at Friday last week, while its balance sheet stood at £8.8 billion, according to the Bank of England. But the Bank said the “scale of the deterioration of liquidity and confidence means that, in the view of the Bank and the PRA, the position was not recoverable”.
It added: “Therefore, the Bank of England decided, in consultation with HM Treasury, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), to use the resolution powers for stabilising failing banks that were brought in following the financial crisis.”
The Bank stressed that all services will continue to operate as usual at SVB UK following the deal, with all staff remaining employed by the bank. It said: “Customers can continue to contact SVB UK through the usual channels and borrowers should make any loan repayments to SVB UK as normal.”
The wider UK banking system “remains safe, sound, and well capitalised”, the Bank added.