HSBC has announced that its subsidiary, HSBC UK Bank, will acquire Silicon Valley Bank UK (SVB UK) for £1 ($1.21). The acquisition will be funded from existing resources and will be completed immediately, according to HSBC. SVB UK had loans of approximately £5.5bn ($6.7bn) and deposits of around £6.7bn ($8.1bn) as of 10 March 2023. For the financial year ending 31 December 2022, SVB UK recorded a profit before tax of £88m ($107m) and its tangible equity is expected to be around £1.4bn ($1.7bn).
HSBC Group CEO Noel Quinn said that the acquisition makes “excellent strategic sense” for HSBC’s business in the United Kingdom, strengthens its commercial banking franchise, and enhances its ability to serve innovative and fast-growing firms. He added that 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.
The news follows US authorities ordering SVB to shut down operations on 10 March 2023, which triggered panic in crypto markets because some major crypto companies, such as Circle and Coinbase, had significant exposure to the bank. Circle, the issuer of USD Coin (USDC), the second-largest stablecoin by market value, is unable to withdraw $3.3bn of its $40bn reserves due to SVB’s collapse. Coinbase had around $240m in corporate funds at Signature, but is expecting to recover the amount fully. Paxos, the issuer of stablecoins like Pax Dollar (USDP) and the troubled Binance USD (BUSD) stablecoin, also had $250m stuck at Signature, but said that its private insurance would cover the amount.
In conclusion, the acquisition of Silicon Valley Bank UK by HSBC is an important strategic move for the banking giant in the United Kingdom. The acquisition provides HSBC with access to a large customer base and strengthens its commercial banking franchise, while enhancing its ability to serve innovative and fast-growing firms. SVB UK customers will benefit from the stability and security provided by HSBC.
