HSBC buys UK arm of Silicon Valley Bank in last-ditch rescue deal
12 March 2023, 10:00 | Updated: 13 March 2023, 07:19
HSBC has bought the UK arm of a collapsed American bank as part of a last-ditch rescue deal.
Listen to this article
Loading audio...
The Government and the Bank of England "facilitated a private sale" of Silicon Valley Bank UK to HSBC, with "no taxpayer support", Chancellor Jeremy Hunt said.
He added in a tweet: "I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise."
The Bank of England confirmed that all deposits will remain "safe and secure" following the deal.
Read more: Sadiq Khan blames Boris Johnson for Ulez as London mayor vows to 'see through' expansion
This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC
— Jeremy Hunt (@Jeremy_Hunt) March 13, 2023
Deposits will be protected, with no taxpayer support
I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise
Rishi Sunak and Jeremy Hunt were locked in urgent talks with the Bank of England over the weekend as the Chancellor admitted the failure of Silicon Valley Bank poses a 'serious risk' to the UK's technology sector.
The US financial institution is the second biggest American bank ever to collapse.
Its demise is also the biggest banking failure since 2008.
The Chancellor said the collapse poses no "systemic risk" to the economy, while the Treasury attempted to reassure the technology sector with a promise that staff are working "at pace" to provide cash.
Mr Hunt said: "There is no systemic risk to our financial system, so people should be reassured on that basis.
"But there is a serious risk to our technology and life sciences sectors, many of whom bank with this bank."
It comes after the Coalition for a Digital Economy (Coadec) warned that its collapse could have a significant impact on this country's tech start-ups.
Coadec executive director Dom Hallas said on Saturday: "It is clear this could have a significant impact on the UK's tech start-up ecosystem.
"In light of the concern and panic, I wanted to share an update on what we know and where we are.
"We know that there are a large number of start-ups and investors in the ecosystem who have significant exposure to SVBUK and will be very concerned.
"We have been engaging with the UK Government, including Treasury and No 10, about the potential impact and I know that work has been going on overnight on policy options."
In a statement issued on Sunday morning, the Treasury said it is treating the issue "as a high priority".
"The Government is working at pace on a solution to avoid or minimise damage to some of our most promising companies in the UK and we will bring forward immediate plans to ensure the short-term operational and cashflow needs of Silicon Valley Bank UK customers are able to be met," the statement said.
"The Government and the Bank understand the level of concern that this raises for customers of Silicon Valley Bank UK, and especially how it may impact on cashflow positions in the short term."
It added that the Government recognises that SVBUK's failure "could have a significant impact on the liquidity of the tech ecosystem".
The Bank of England announced on Friday that Silicon Valley Bank UK was set to enter insolvency, following action taken by its parent company in the United States.
Economic Secretary to the Treasury Andrew Griffith is due to hold a roundtable with representatives from affected firms to discuss their concerns. SVBUK said it will be put into insolvency from Sunday evening.
UK’s economy returns to growth after rebound in entertainment and transport
It is a subsidiary of Silicon Valley Bank (SVB) and was the first location it opened outside the US.
The insolvency announcement came after SVB was put under US government control on Friday afternoon in the biggest failure of a US bank since the 2008 financial crisis.
The Bank of England said the company would stop making payments and accepting deposits. The move will allow depositors to be paid up to £85,000 from the deposit insurance scheme.
SVB said: "We are announcing that, following conversations with the Prudential Regulatory Authority, there is an intention, barring any intervening event, to put Silicon Valley Bank UK Limited into insolvency from Sunday evening.
"We are determined to work on the behalf of our clients and are proud of our employees in their engagement with you.
"If clients have any questions please get in touch with us and we will try our best to answer any and all of your queries."
