HSBC, after acquiring SVB UK for a nominal £1 in a distressed sale back in March, is now rebranding and expanding the acquired assets under its ownership. The banking giant unveiled HSBC Innovation Banking, a new subsidiary dedicated to providing banking services to startups, investors, and the broader tech community.
With rumors circulating for weeks, the official announcement came during the start of London Tech Week. The new division, operating under HSBC UK, extends beyond SVB UK, as HSBC has incorporated teams from the United States, Israel, and Hong Kong into the operation, employing over 700 individuals. Presently, the clientele mainly consists of UK-based customers, totaling around 3,000, according to HSBC.
The establishment of this new division sets the stage for fierce competition between former allies. First Citizens acquired most of SVB’s banking operations in the US, which included approximately $72 billion in deposits and loans. Following the collapse of SVB Financial, the operations were renamed SVB Bridge Bank. Notably, First Citizens is currently suing HSBC for allegedly poaching SVB staff, including David Sabow, the former head of SVB in the US. Sabow will now lead HSBC Innovation Banking in the US. HSBC also recruited the entire SVB Israel team, led by David Cohen, along with Gadi Moshe, Alon Oz, Tamir Efrati, Meir Slobodov, and approximately 20 others. It is likely that the lawsuit was filed in anticipation of today’s official announcement.
Erin Platts, the former head of SVB UK, appears to be leading the newly established Innovation Banking business with the title “CEO of HSBC Innovation Banking UK.”
HSBC’s move to tap into the rapidly growing technology sector comes at an opportune moment, as funding for tech companies has slowed down significantly in the past 18 months. By launching this revamped effort during a relatively quieter period, HSBC aims to position itself for substantial gains when the market rebounds. Furthermore, the backing of a massive financial institution like HSBC provides an added layer of resilience that SVB lacked.
The initial size of the business and its assets under management remains undisclosed. When HSBC acquired SVB UK, the deal included assuming loans of approximately £5.5 billion and deposits of around £6.7 billion. In SVB UK’s latest financial report for the fiscal year ending on December 31, 2022, it recorded a profit before tax of £88 million. At the time of the acquisition, HSBC estimated SVB UK’s tangible equity to be around £1.4 billion.
Noel Quinn, Group Chief Executive of HSBC, emphasized the importance of the UK’s technology and life sciences sectors in the country’s economic growth and global exports. He stated, “HSBC now has a world-class team focused on innovation companies, their founders, and their investors. Our new innovation teams will be there to support our clients’ international growth at every step.”
The scope of the operation extends beyond technology to include adjacent areas such as startup businesses and financiers in the life sciences field.
UK Prime Minister Rishi Sunak commended the launch, recognizing the UK’s prominence in the tech and life sciences sectors. He stated, “HSBC Innovation Banking will help innovative businesses to unlock their potential, create more jobs and access new global opportunities – supporting my priority to grow the UK economy and cement our position as a science and tech superpower.”
