According to Reuters, HSBC said on Monday it had acquired the UK subsidiary of Silicon Valley Bank for 1 pound. UK’s Treasury says that the Silicon Valley Bank UK sale to HSBC transaction has been facilitated by the Bank Of England. According to Reuters,
“This acquisition makes excellent strategic sense for our business in the UK,” HSBC CEO Noel Quinn said in a statement.
As per the reports, HSBC UK bank PLC, is acquiring Silicon Valley Bank UK limited (SVB UK) for £1. The assets and liabilities of parent companies of SVB UK are excluded from transaction. As of 10 March 2023, SVB UK had loans of around £5.5bn and deposits of around £6.7bn.
The SVB crisis unfolded when SVB Financial Group, on March 8, announced the sale of $21 billion in portfolio securities and a $2.25 billion share offering to raise money. This came after a large loss on its portfolio, which included mortgage-backed assets and US Government bonds. What followed was a run on bank scenario when several big depositors started pulling out funds from the bank. In order to contain the contagion risk, the bank was closed and FDIC was appointed a receiver.
On Sunday, the US authorities came up with a resolution plan. All SVB depositors will have unlimited access to all of their funds starting on Monday, March 13, without any withdrawal limitations or upper limits. The Federal Deposit Insurance Corporation states that bank deposits are covered up to $250,000; however, regulators have the power to raise this threshold in order to cover all depositors.
After Silicon Valley Bank failed, US officials acted quickly to allay worries about the stability of the financial system on Sunday by putting in place a new safeguard for banks. The steps are intended to rebuild confidence in the banking system after SVB’s failure raised issues, and they were jointly announced by the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corp.