On March 13, HSBC Holdings plc announced that its UK subsidiary, HSBC UK Bank Ltd, has acquired Silicon Valley Bank UK Ltd (SVB UK) for £1. As of March 10, 2023, SVB UK had around £5.5 billion in loans and around £6.7 billion in deposits.
SVB UK posted a pre-tax profit of £88 million for the financial year ending December 31, 2022. SVB UK’s tangible assets are expected to be approximately £1.4 billion. A final calculation of the proceeds from the acquisition will be provided in due course. Assets and liabilities of SVB UK’s parent company are excluded from the transaction. The transaction is completed immediately. In a statement, HSBC said the acquisition would be funded from existing resources.
Noel Quinn, Group Chief Executive of HSBC, said: “This acquisition makes excellent strategic sense for our UK business. It strengthens our merchant banking franchise and our position in the UK and internationally. The ability to deliver services to innovative and fast-growing companies, including in the technology and life sciences sectors. We welcome SVB UK customers to HSBC and look forward to helping them grow in the UK and globally. SVB UK customers can continue to bank as usual because HSBC bank backs their deposits with strength, safety and security. We warmly welcome our SVB UK colleagues to HSBC and are delighted to begin working with them.”
HSBC will update shareholders on the acquisition in its first quarter 2023 results on May 2.
In a separate statement, the Bank of England (BoE) said it had brokered the deal, customer deposits would be protected, and no taxpayer money was involved in the deal.
Potential bidders held conference calls with the Bank of England overnight, people familiar with the talks said.
HSBC had emerged as the leading white knight bidder for SVB UK by 6 am, with the bank’s CEO, Noel Quinn, involved in overnight talks.
British Prime Minister Rishi Sunak, Hunt and City Council Secretary Andrew Griffiths were involved in the extraordinary nighttime rescue mission. In contrast, Bank of England governor Andrew Bailey and the Prudential Regulation Authority’s Sam Woods were also involved.
A person briefed on the deal over the future of SVB UK said it was a “fully competitive” process with several parties interested in taking over the troubled bank. Sunak, who was in California for a defence summit with the leaders of the US and Australia, was said to have become “very hands-on” overnight.
The government has been racing to sell SVB UK all weekend, with a backup plan to support companies whose deposits are stuck with lenders. US depositors at SVB will get all their money back on Monday, US regulators said late Sunday.