The embattled Silicon Valley Bank has just come under new ownership, at least in the United Kingdom. Per a filing on March 13, 2023, HSBC UK Bank plc, a subsidiary of the behemoth bank, announced that it is purchasing Silicon Valley Bank UK Limited (SVB UK) for £1 (or $1.21 at today’s exchange rate). The acquisition also means that depositors at the British SVB will be “protected, with no taxpayer support.”
The acquisition of SVB by HSBC means that depositors at the British branch of SVB “can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety, and security of HSBC,” said CEO of HSBC Group Noel Quinn.
The UK finance ministry told Decrypt via email that “customers of SVB UK will be able to access their deposits and banking services as normal from today,” while the UK’s Chancellor of the Exchequer Jeremy Hunt tweeted that “deposits will be protected, with no impact on customers.”
The UK’s tech sector is a world-leader and is of huge importance to the British economy. SVB UK’s clients include businesses in the tech and startup world. The branch holds roughly $8.1 billion (£6.7 billion) in deposits and held loans of roughly $6.6 billion (£5.5 billion), per the filing.
In a statement provided to Decrypt by his office, Jeremy Hunt said that, “the UK’s tech sector is 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 it, and this news shows that we are doing just that.”
What was Silicon Valley Bank?
Silicon Valley Bank, a tech and startup-focused bank, suffered a liquidity crisis last week. This led to a bank run, with clients withdrawing their deposits. To mitigate the situation, SVB had been converting its dollars into Treasuries, but clients were simultaneously drawing from their deposits to extend their runway. With mismatched maturity dates, SVB was forced to sell Treasuries at a loss, worsening its situation. Following rumors of a liquidity crisis and a possible stock sale, the bank was shut down on Friday and the Federal Deposit Insurance Corporation (FDIC) was called in.