HSBC buys UK Silicon Valley Bank for £1 to protect customers and taxpayers – what happened?

Image source: News24

Global banking giant HSBC has bought the UK unit of now-defunct Silicon Valley Bank for £1 ($1.21) following overnight negotiations between the government, regulators and other potential buyers.

The transaction excludes assets and liabilities of SVB UK’s parent company.

SVB’s UK arm had about 5.5 billion pounds ($6.7 billion) in loans and about 6.7 billion pounds ($8.1 billion) in deposits as of March 10, HSBC said in an official announcement.

Additionally, the bank’s full-year pre-tax profit for 2022 is £88m. HSBC said it expected SVB UK to have tangible assets of around £1.4bn, but added that “the final calculation of the proceeds arising from the acquisition will be in due course.”

HSBC Group chief executive Noel Quinn said the acquisition “strengthens our business banking business and enhances our ability to service innovative and fast-growing companies, including technology and field of life sciences.” He added:

“SVB UK customers can continue to bank safely as usual, knowing that HSBC has the strength, safety and security to back their deposits. We warmly welcome our SVB UK colleagues to HSBC and are delighted to begin working with them .”

The sale was brokered by the Bank of England in consultation with the UK Treasury. HSBC added that the acquisition will be funded from existing resources and will be completed immediately.

The announcement came amid reports that UK ministers and the Bank of England held overnight talks with regulators and some potential buyers in a race to complete the private sale of the UK arm of Silicon Valley Bank before the market opened on Monday.

UK Finance Minister Jeremy Hunt reportedly backed a private sale because it would not require massive government intervention to protect depositors.

On Sunday, Hunt said tech and life sciences companies using SVB UK banks were at “serious risk”, with senior founders warning of “carnage” if they failed to pay their wages and bills by next week.

U.S. Intervention in the Banking Crisis

Meanwhile, in the U.S., regulators approved a plan to support depositors and financial institutions linked to parent company SVB and another crypto-friendly bank, Signature Bank, on Sunday over similar systemic contagion concerns. And off.

Depositors of failed SVB and Signature Bank will have full access to their deposits as part of a number of initiatives approved by officials over the weekend. Signature has been a popular source of funding for cryptocurrency companies.

It is worth noting that some major cryptocurrency companies have also been severely affected by the collapse of Silicon Valley Bank and Signature Bank. On the one hand, USDC issuer Circle has $3.3 billion in USDC reserves at the failed bank.

The news initially sparked a wave of withdrawals and redemptions that pushed USDC away from its target peg of $1. However, the stablecoin has corrected its losses for most of the past day, surging to around $0.99 at the time of writing.

Source of information: Compiled from CRYPTONEWS by 0x Information.Copyright belongs to the author, without permission, may not be reproduced

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