Advertisement

News

HSBC Makes a Billion-Dollar Purchase for the Price of a Coffee!

Silicon Valley Bank's collapse is one of the biggest in living memory since Lehman Brothers in 2008

HSBC Makes a Billion-Dollar Purchase for the Price of a Coffee!
María López

María López

  • Updated:

HSBC has bought the UK subsidiary of Silicon Vally Bank (SVB UK) in exchange for one pound. Thanks to the rescue, the deposits of more than 3,000 customers have been secured, amounting to a value of £6.7 billion. The Bank of England, which had been preparing to take the bank through an insolvency process, said that the money of all SVB UK depositors was safe thanks to the purchase.

According to HSBC, all SVB UK services will continue to operate as normal and customers should not experience any issues. It was feared that technology and start-up companies operating with SVB UK would not be able to meet their costs as they would not be able to access deposits. According to Jeremy Hunt, UK Chancellor of the Exchequer, the operation has been carried out without the need for taxpayers’ money.

For HSBC, this acquisition is of great strategic value. According to Noel Quinn, group CEO, “It strengthens our commercial banking franchise and enhances our ability to serve more innovative and fast-growing businesses. This involves the technology and science sectors”.

The UK Chancellor of the Exchequer, Jeremy Hunt, has also spoken about the deal, adding that “HSBC is the largest bank in Europe, and SVB UK’s customers should be reassured by its strength, safety and security”.

Silicon Valley Bank, a bank for entrepreneurs

Sillicon Valley Bank was a subsidiary of SVB Financial Group, specializing in lending to technology startups and entrepreneurs. In recent times, it managed to multiply its deposits to almost $200 billion by 2022.

Last Wednesday, the bank announced that it was seeking a capital increase to overcome its financial difficulties. Specifically, the figure amounted to $2.25 billion, which was needed to balance its balance sheet.

Following the news, panic reigned among investors. Finally, banking regulators had to act last Friday, March 10, in the face of the money flight that the institution was suffering in a very short period of time. Despite the whole fiasco, a statement issued by the Federal Reserve, the FDIC and the Treasury Department together announced that the necessary measures would be taken to protect all depositors.

María López

María López

Artist by vocation and technology lover. I have liked to tinker with all kinds of gadgets for as long as I can remember.

Latest from María López

Editorial Guidelines