Averting one of the biggest bank insolvencies in history, the largest European bank- HSBC has acquired the UK arm of the US-based Silicon Valley Bank (SVB) for a symbolic price of £1. The deal comes after SVB’s collapse, along with another American banking giant, in what is being touted as the biggest bank collapse since the 2008 crisis.
SVB’s collapse followed with nearly 200 tech startups’ chiefs pushing for SVB’s bailout, fearing loss of deposits and businesses going into insolvency almost overnight. Note, SVB’s UK arm is one of the key banking institutions for the UK’s tech startups. The acquisition by HSBC is being welcomed for securing the funds of over 3,500 UK depositors.
While the UK Government lauds the decision for protecting the interests of the tech startups and the depositors, HSBC considers the deal ‘strategic’. HSBC CEO, Noel Quinn, said in a statement that the acquisition will help HSBC strengthen commercial banking and expand business, along with serving innovative startups in the UK and abroad.
SVB has been a preferred lender especially for tech startups. Its UK arm has deposits of about £6.7 billion and loans of about £5.5 billion. The institution facing liquidity crunch shut down earlier in March, triggering a bank crisis in the US. The domino effect was felt by banking institutions across the globe with banking indices and bank stocks floating in a sea of red.