The UK arm of American bank Silicon Valley Bank (SVB) has been bought by financial giant HSBC, after its US parent company collapsed last week.
In a move that the Bank of England and UK government believes will maintain confidence in the country’s banking system, the deal - for a nominal £1 fee - came after SVB’s US parent firm collapsed on Friday (10 March).
The biggest bank failure for 15 years, it threatened the survival of startups in both North America and the UK before governments and central banks on both sides of the Atlantic Ocean intervened over the weekend. While investor jitters have been calmed somewhat, concerns remain about the health of the global financial system.
It comes as the UK economy faces major challenges in the form of soaring inflation and rising interest rates. Although a recession is predicted, continued weak growth in the country’s economy is creating greater positivity about the situation.
So, who owns HSBC - and who are its biggest shareholders? Here’s everything you need to know.
What is HSBC?
London-headquartered banking group HSBC started life in 1865 as the Hong Kong and Shanghai Banking Corporation. It was originally intended as a vehicle to promote international trade between the two highly influential Chinese port cities and the rest of the world.
The bank has since evolved into an international financial services giant with a presence pretty much everywhere. As it is publicly listed on the London, New York, Hong Kong and Bermuda stock exchanges, it has shareholders all over the world.
In the UK, as well as the high street banking brand of the same name, HSBC owns First Direct. It has since absorbed the UK arm of Silicon Valley Bank (SVB) into its operations. These retail banking brands are owned by a ringfenced subsidiary of HSBC Holdings, with a separate investment bank - HSBC Bank - also operating in the country.
They are separated as a result of post-2008 financial crisis legislation that means banks have to keep the riskier parts of their businesses away from the day-to-day banking services they provide. That way, if they get it wrong, consumers are protected.
Overall, HSBC serves 39 million people worldwide and 1.4 million businesses in 53 countries.
Who owns HSBC?
HSBC Holdings, which owns all of HSBC’s operations worldwide, is operated by a board of directors who are accountable to the bank’s shareholders. At the helm are CEO Noel Quinn and chair Mark Tucker. The board would have had to have rubberstamped the acquisition of Silicon Valley Bank UK.
The largest known shareholders in the business are major investment companies. The biggest of them all is Ping An Asset Management - one of China’s most influential investment companies.
With what is believed to be an 8.29% stake in HSBC - compared to 7.82% for the next largest shareholder Blackrock - it has a major voice on the direction it believes HSBC should take. This has not been without controversy in recent years.
Given the authoritarian Chinese state has far-reaching powers over what appear to be private companies, Ping An’s recent lobbying to spin off HSBC’s Asian business into a separate company has been seen by some as an attempt by Beijing to wrest control of the banking giant’s most lucrative subsidiary, although Noel Quinn has rubbished the theory.
Meanwhile, HSBC came under the spotlight during the Hong Kong democracy protests, as it appeared to back Beijing’s security crackdown in the city. It even froze some of the protesters’ bank accounts. At the time, it said: “When we get a specific legal instruction by police authorities in Hong Kong, or anywhere else, to freeze the accounts of somebody under formal investigation, we have no choice but to comply.”
Other major shareholders include US-based The Vanguard Group (3.31%), the Norwegian Sovereign Wealth Fund (3.04%), Legal & General (1.2%), and State Street Global Advisers (1.04%).