March 13 (UPI) — The $9.7 billion British subsidiary of collapsed Silicon Valley Bank has been sold to HSBC heading off a crisis in the country’s tech sector, British regulators announced Monday.
The sale, less than 72 hours after SVB was shut and placed in receivership in California, was arranged by the Bank of England working with H.M. Treasury, the Prudential Regulation Authority and the Financial Conduct Authority under financial crisis-era emergency powers for dealing with distressed banks and building societies.
The deal — reportedly for $1.20 — was a private sale and no taxpayers or state funds were involved.
The Bank of England which had announced Friday that SVB would be placed into insolvency, said there would be no interruption to banking services Monday and customers would be able to access their deposits and banking services as normal.
“This action has been taken to stabilize SVBUK, ensuring the continuity of banking services, minimizing disruption to the U.K. technology sector and supporting confidence in the financial system,” the bank said. “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.”
It added that customers can continue to contact SVBUK “through the usual channels” and borrowers should make any loan repayments to the bank as they usually do.
Bank of England added that there would be no job losses and SVB remained a PRA/FCA authorized bank.
HSBC Group CEO Noel Quinn said the takeover “strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the U.K. and internationally.”
“SVBUK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC.”
London-headquartered HSBC is Europe’s largest bank and one of the world’s largest banking and financial services institutions, serving 39 million customers globally.
Chancellor Jeremy Hunt said Britain’s tech sector was “genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs.”
“I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVBUK’s customers with confidence. I am pleased we have reached a resolution in such short order.
“HSBC is Europe’s largest bank, and SVBUK customers should feel reassured by the strength, safety and security that brings them.”
The California Department of Financial Protection closed SVB on Friday, marking the largest bank failure since Washington Mutual in 2008 and the first FDIC-insured bank to close since Almena State Bank in 2020.
The SVB rescue comes just hours after U.S. Treasury Secretary said there would be no federal bailout for SVB in the United States and a second U.S. bank was shuttered.
Regulators shut New York’s Signature Bank on Sunday with President Joe Biden moving to assuage fears over the stability of the financial system by vowing to continue efforts to strengthen oversight and regulation.
Signature Bank — a state-charted, federal-insured crypto industry lender based in New York City — was closed by state bank regulators in an effort “to protect depositors,” New York Department of Financial Services Superintendent Adrienne Harris said in a statement.
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