HSBC has bought the UK arm of Silicon Valley Bank, after the lender collapsed, stranding billions of dollars in deposits. The Bank of England, in a statement on Monday, said that after consultation with the Prudential Regulation Authority (PRA), HM Treasury (HMT) and the Financial Conduct Authority (FCA), the lender decided to sell the UK arm of Silicon Valley Bank to HSBC UK Bank Plc. HSBC is authorised by the PRA and the FCA.
The UK central bank said that the action was taken to stabilise SVBUK, as well as ensure the continuity of banking services, minimise disruption to the UK technology sector and support confidence in the financial system.
The central bank and the treasury “can confirm that all depositors’ money with SVBUK is safe and secure as a result of this transaction”, it said. The UK arm of SVB will continue to be operated normally by SVBUK, and all services will continue to operate as normal. Customers would not notice any changes, said the Bank of England.
It also informed the customers that the usual channels can be used by them and borrowers should continue repaying their loans as normal. The staff will remain employed by SVBUK.
The Bank of England also announced that the Monday announcement supercedes the announcement on March 10 that stated that without any meaningful further information, it intended to apply to the court to place SVBUK under Bank Insolvency Procedure.
“No other UK banks are directly materially affected by these actions, or by the resolution of SVBUK’s US parent bank. The wider UK banking system remains safe, sound, and well capitalised,” it said.
At the point of failure, SVBUK had a total balance sheet size of approximately 8.8 billion pound, and a deposit base of approximately 6.7 billion pound, it said.
MP for South West Surrey Jeremy Hunt also took to Twitter to address the development, "This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC. Deposits will be protected, with no taxpayer support. I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise."
This development comes after California banking regulators closed start-up-focused Silicon Valley Bank on Friday and appointed the Federal Deposit Insurance Corporation to take control of the lender's deposits. SVB is the first Federal Deposit Insurance Corporation-insured bank to fail in more than two years, the last being Almena State Bank in October 2020.
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