HSBC buys UK SVB unit for £1, brings relief to sector…

Bloomberg – HSBC Holdings Plc (HSBC) decided to acquire the British branch of SVB (plims)capping a busy weekend as ministers and bankers explored different formulas to avoid disappearance.

HSBC UK Bank plc, a subsidiary of the London-listed credit institution, buys Silicon SVB UK (Silicon Valley Bank UK Limited) For £1″, the entity said in an announcement on Monday. the operation It will be implemented immediately and will be covered by the available means.

Noel QuinnCEO, noted in a letter that the purchase made “strategic sense” and would increase its position in the technology and biosciences sectors.

The Bank of England confirmed on Monday in a note that “All money deposits at Silicon Valley Bank UK are safe and secure as a result of this transaction”. Similarly, the entity indicated that all of its services “will continue to operate as fully as normal and customers will not notice any change”, and that “these events will not materially affect any other UK bank”.

The Bank of England added that SVB staff in the UK are still employed and the lender remains authorized by UK regulators.

“This is a good solution for everyone,” he said. Gary Greenwoodan analyst at Shore Capital, said in a note, adding that the impact on HSBC’s outlook is likely to be irrelevant.

The sharp rise in global interest rates has caught some of the world’s largest banks by surprise. Standard Chartered plc said in its full-year results last month that: recorded a loss $571 million recorded in “core and other items” which the bank attributed to losses from interest rate hedges in the treasury division.

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Meanwhile, HSBC reported on $5 billion in “counter moves” in their holdings of financial instruments used to hedge their exposure to interest rate movements.

SVB Financing

UK SVB Unit I have loans for approx £5.5 billion (US$6.7 billion) and Deposits of around £6.7 billion ($8,128) as of March 10, according to an HSBC statement. In 2022, SVB UK It reported a profit before tax of £88 million (106.76 million US dollars) is expected to have Tangible capital About 1.4 billion pounds sterling (1698.4 million US dollars).

This is the basis Rounding error As for HSBC, which had $493 billion in UK customer accounts at the end of 2022, according to its annual report.

The Bank will provide a final account of the gains from the acquisitionHSBC reported. The assets and liabilities of SVB UK’s parent companies are excluded from the transaction.

The acquisition comes at a time when HSBC is reducing some of its global presence. It sold its Canadian arm in November and stripped from retail operations in France and the United States in 2021. Coen said at the time of the Canada sale that the money raised from the transaction would provide him with financial strength “to invest in the growth of our core ‘business,’ as well as Dividend financing and buybacks.

Ministers and officials had spent the weekend making plans for Protecting the UK’s life sciences and technology industries, After warnings that they would be paralyzed without intervention. Although small in size compared to the UK’s largest banks, SVB has a large role in the start-up world, describing itself as “the banking partner of choice for founders, entrepreneurs and investors”.

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A large number of lenders have been raised as potential buyers. Minister of Finance , Jeremy Hunthe said that SVB depositors would be protected without taxpayer support.

“We could have seen some of our most important companies, our most important strategic companies disappear, and that would have been very dangerous,” Hunt said. “The Bank of England is very clear on that The UK banking system is very secure. It is well capitalized. And I think we showed that resilience because of what happened over the weekend and the fact that we were able to find a solution so quickly.”

What Bloomberg Intelligence says:

HSBC’s acquisition of the UK arm of SVB, which includes £6.7 billion (US$8,128) in deposits, and £1.4 billion (US$1,698.4 million) of tangible capital, Backed by its capital and liquidity (with a loan-to-deposit ratio of less than 60%) f Affirms the lender’s commitment to maintaining a global presence And the importance of the United Kingdom (20% of income and deposits). he Agreement, under the supervision of the Bank of England, will be instrumental in minimizing disruption to the £1 trillion (US$1.2 trillion) UK technology sector. Jonathan Tice and Thomas Neuzel, Financial Analyst, BI

Nascent clearinghouse Bank of London Group Ltd. said in a statement on Sunday that Make a formal proposal to take over From SVB UK to the Treasury, Bank of England and Company Board. The Royal Group, an investment firm controlled by senior members of the Abu Dhabi royal family, and the group’s lender SoftBank Corp. (9984), OakNorth, She was also among those considering an acquisitionBloomberg reported on Sunday.

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The other option was to accept deposit-lenders from the UK arm of SVB Bank. Under the plan, several large banks would have taken over depositors from the SVB, giving them access to funds until their money is released from the lender.

leaders nearly 180 tech companies said in an open letter to Hunt Bloomberg reasoned that losing deposits in SVB would cripple the sector and set the ecosystem back 20 years.

Michael Moorepresident of the British Association of Private Equity and Venture Capital, told Bloomberg Television that his group She conducted a survey of 1,000 portfolio companies and a third of them were banking with SVB. who are they 40% experience immediate difficultiesHe said before announcing the sale is like not paying salaries.

The British unity deal is yet to come US financial regulators moved on Sunday to reassure all depositors that their money is safe After the collapse of the SVB and the creation of a new loan program provided by the Federal Reserve, funded by the Treasury Department.

With assistance from Lex Whickman, Reed Landberg, and Marion Dakers.


Aileen Morales

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