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HSBC UK Acquires Silicon Valley Bank UK for £1 in Strategic Move to save depositor’s money

HSBC Holdings Plc has announced that its UK ring-fenced subsidiary, HSBC UK Bank plc, is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1. SVB UK had loans of around £5.5 billion and deposits of around £6.7 billion as of March 10, 2023.

This acquisition is a strategic move for HSBC in the UK as it strengthens the bank’s commercial banking franchise and enhances its ability to serve innovative and fast-growing firms, including those in the technology and life-science sectors, in the UK and internationally. For the financial year ending December 31, 2022, SVB UK recorded a profit before tax of £88 million, and its tangible equity is expected to be around £1.4 billion.

HSBC will fund the acquisition from its existing resources, and the assets and liabilities of the parent companies of SVB UK are excluded from the transaction. The acquisition completes immediately, and SVB UK customers can continue to bank as usual, with the knowledge that their deposits are backed by the strength, safety, and security of HSBC.

HSBC Group CEO Noel Quinn said, “We welcome SVB UK's customers to HSBC and look forward to helping them grow in the UK and around the world. We warmly welcome SVB UK colleagues to HSBC, and we are excited to start working with them.”

The Bank of England (BoE) facilitated the deal and assured that customer deposits will be protected, and no taxpayer money is involved in the acquisition.

The negotiations for the acquisition were fully competitive, with multiple parties interested in taking over SVB UK. The UK Prime Minister Rishi Sunak, Hunt, and City Minister Andrew Griffith were involved in the overnight talks, along with Andrew Bailey, Bank of England Governor, and Sam Woods of the Prudential Regulation Authority.

The UK government spent the weekend racing to sell SVB UK and put together a backup plan to support companies that have deposits trapped in the lender. However, US regulators on Sunday evening confirmed that SVB’s American depositors would have access to all of their money on Monday.

HSBC will update shareholders on the acquisition in its 1Q 2023 results on May 2. Overall, the acquisition is expected to enhance HSBC's position in the UK market and strengthen its capabilities to serve innovative and fast-growing firms.

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