HSBC has acquired Silicon Valley Bank's U.K. arm.
(Photo : Photo by NIKLAS HALLE'N/AFP via Getty Images)
A sign is pictured above a branch of a HSBC bank in central London on April 26, 2022. - HSBC profits slid in the first quarter, the Asia-focused bank announced on Tuesday, after it was hit by bad debts as Russia's invasion of Ukraine sent inflation rocketing further.
On Friday, Mar. 10, the Silicon Valley Bank (SVB) collapsed in the United States after it failed to raise enough money to cover losses from the sale of assets.
Because of this alarming failure, consumers in the United Kingdom are worried that SVB UK would also be affected.
But, the latest acquisition by HSBC saved the consumers of SVB's U.K. arm.
Silicon Valley Bank's UK Arm Acquired by HSBC for Only $2
According to BBC News' latest report, SVB's U.K. subsidiary was purchased by HSBC UK.
(Photo : Photo by Justin Sullivan/Getty Images)
A customer stands outside of a shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California. Silicon Valley Bank was shut down on Friday morning by California regulators and was put in control of the U.S. Federal Deposit Insurance Corporation.
Also Read: Revolut, Wise Receive Funding From Tech Firms After Silicon Valley Bank Collapse
Although the U.S. parent company of SVB UK failed, it was still making profits before HSBC announced the acquisition.
Sources from the Bank of England explained that HSBC's SVB UK acquisition was more of a preventive effort.
If HSBC didn't make the purchase, SVB UK could also struggle financially since the collapse of SVP US could lead to mass withdrawals in the United Kingdom.
CNBC reported that SVB UK was acquired for only $1.21. However, the liabilities and assets are excluded from the acquisition.
"SVB U.K. customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety, and security of HSBC," said Noel Quinn, HSBC Group CEO.
What's in It for HSBC?
Noel Quinn said that the latest SVB UK acquisition could strengthen the commercial banking franchise of HSBC.
He added that this purchase is expected to enhance their effectiveness in serving innovative and fast-growing firms.
These include the life-science and technology sectors in the United Kingdom.
U.K. regulators said that HSBC's latest acquisition will not affect if ever financial issues appear.
They stated that Europe's largest bank could easily handle the 3,000 business customers of SVB UK.
Here are other stories we recently wrote about the Silicon Valley Bank:
Numerous Indian startups were affected by the Silicon Valley Bank U.S. collapse.
Recently, Elon Musk said he is open to a Silicon Valley Bank acquisition.
Related Article: Etsy Pauses Seller Payouts Due to the Sudden Collapse of Silicon Valley Bank
