HSBC bought the British branch of the American Silicon Valley Bank for a symbolic amount of one pound ($ 1.2) as part of an agreement to rescue it, according to what the government and HSBC announced on Monday.
The sale, which was supervised by the Bank of England and the Treasury, comes after the collapse of Silicon Valley Bank on Friday, causing panic in Britain about its main customers in the technology and life sciences sectors.
“Today, United Silicon Valley Bank has been sold to HSBC,” the government said in a statement, after talks reportedly led by Prime Minister Rishi Sunak.
“The Bank of England facilitated this financial transaction in consultation with the Treasury,” she added. British Finance Minister Jeremy Hunt indicated that no government funds were used in the operation, while all customer deposits were protected.
He stressed that this agreement “guarantees the protection of customers’ deposits and that they can conduct their banking transactions as usual, without the support of taxpayers.” “I am satisfied that we have reached a solution in such a short period of time,” he added.
On Sunday, Hunt warned of a “serious” risk to technology and life sciences companies doing business with Silicon Valley’s bank. HSBC agreed to pay one pound for the purchase, the bank said in a separate statement Monday.
The Asia-focused lender said Silicon Valley’s UK subsidiary had loans of around £5.5 billion and deposits of around £6.7 billion.
HSBC chief executive Noel Cowen said, “This acquisition makes perfect strategic sense for our UK business.” The agreement excluded the assets and liabilities of the parent companies of Silicon Valley Bank’s UK branch, while HSBC expects to gain from the acquisition.
