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HSBC acquired the UK business unit of Silicon Valley Bank to save it after the bank suddenly collapsed this week. The buyout put a stop to the possible ordeal that British tech firms could go through if the deal did not take place.
It was reported that HSBC agreed to buy SVB’s UK business after an all-night discussion between the Prime Minister and the Bank of England. The bank and financial services holding company will spend just £1 for the deal.
HSBC’s move to buy the UK arm of the bankrupt Silicon Valley Bank just secured the deposits of thousands of tech firms in the region that hold money at the failed lender. CNN Business reported that if SBV UK did not find a buyer, it would have been set down into insolvency by the Bank of England since its parent in the United States disintegrated, throwing the industry into chaos.
Moreover, if it ended in insolvency, SVB’s British customers would only be left with deposits worth up to £85,000 or $100,000. For joint accounts, the value would only be £170,000 or around $200,000.
The HSBC buyout was called a “rescue deal,” and the chief executive of financial tech startup Uncapped, Piotr Pisarz, said the development is a piece of tremendous news for the startup ecosystem in the country. “I think we can all relax a bit today,” he told CNN.
“This acquisition makes excellent strategic sense for our business in the UK,” HSBC Group’s CEO, Noel Quinn, said in a press release. “It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally.”
He added, “We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world. SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC.”
Photo by: IKECHUKWU JULIUS UGWU/Unsplash
