HSBC rescues stricken tech lender from insolvency
Sticken Silicon Valley Bank (UK) Ltd has been sold to HSBC – saving it from insolvency.
The deal has been facilitated by the Bank of England, in consultation with the Treasury, using powers granted by the Banking Act 2009. The Government has stressed that no taxpayer money is involved, and customer deposits have been protected.
Chancellor Jeremy Hunt said: “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 our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.
“Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support. I am pleased we have reached a resolution in such short order.
“HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”
Tech businesses banked by Silicon Valley Bank have had an anxious weekend waiting for a government response to the collapse of the US based bank.
On Friday (10 March) the Bank of England, which regulates the banking sector, placed Silicon Valley Bank UK (SVBUK) into a “Bank Insolvency Procedure” so eligible depositors would be paid out by the Financial Services Compensation Scheme up to the protected limit of £85,000 or up to £170,000 for joint accounts.
It said SVBUK’s other assets and liabilities would be managed in the insolvency by the bank liquidators and recoveries distributed to its creditors. Adding: “SVBUK has a limited presence in the UK and no critical functions supporting the financial system. In the interim, the firm will stop making payments or accepting deposits.”
The BBC reported on Sunday night that a bid had been submitted to the Treasury from a consortium of banks led by the Bank of England to acquire SVB in the UK.
Speaking on the BBC’s Sunday Politics programme with Laura Kuenssberg, Hunt said: “We want to find a way that minimises — or if we possibly can — avoids all losses to these incredibly promising companies.”
Economic Secretary to the Treasury Andrew Griffith MP said: “The concern of customers of SVB UK is well understood. It is a difficult moment for these businesses who clearly expected to have access to the cash held in their accounts.”
On Sunday the UK Treasury attempted to further reassure the tech sector by saying discussions between the Governor of the Bank of England, the Prime Minister and the Chancellor took place over the weekend. “The government is working at pace on a solution to avoid or minimise damage to some of our most promising companies in the UK and we will bring forward immediate plans to ensure the short term operational and cashflow needs of Silicon Valley Bank UK customers are able to be met.”