HSBC Holdings Plc announced the acquisition of Silicon Valley Bank UK Limited (SVB UK) by its UK ring-fenced subsidiary, HSBC UK Bank plc, for £1. As of March 10, 2023, SVB UK had approximately £5.5 billion in loans and approximately £6.7 billion in deposits.
SVB UK reported a profit before tax of £88 million for the fiscal year ending December 31, 2022. The tangible equity of SVB UK is expected to be around £1.4 billion. The final calculation of the acquisition gain will be provided in due course. The assets and liabilities of SVB UK’s parent companies are not included in the transaction. The transaction is completed instantly. According to HSBC, the acquisition will be funded with existing resources.
“This acquisition makes excellent strategic sense for our business in the UK,” said Noel Quinn, CEO of HSBC Group. It strengthens our commercial banking franchise and expands our ability to serve innovative and fast-growing businesses, including those in the technology and life sciences sectors, both in the UK and globally. We welcome SVB UK’s customers to HSBC and look forward to assisting them in growing in the UK and globally. Customers of SVB UK can continue to bank as usual, knowing that their deposits are backed by the strength, safety, and security of HSBC. We warmly welcome SVB UK colleagues to HSBC and look forward to working with them.”
HSBC will provide an update to shareholders on the acquisition in its first-quarter 2023 results on May 2. The Bank of England (BoE) stated separately that it facilitated the transaction, that customer deposits will be protected, and that no taxpayer money is involved in the transaction.
Potential bidders held conference calls with the BoE all night, according to people briefed on the negotiations. By 6 a.m., HSBC had emerged as the leading white-knight bidder for SVB UK, with Noel Quinn, the bank’s CEO, participating in the overnight negotiations.
The extraordinary overnight rescue mission included UK Prime Minister Rishi Sunak, Hunt, and City minister Andrew Griffith, as well as Andrew Bailey, Governor of the Bank of England, and Sam Woods of the Prudential Regulation Authority.