After all-night negotiations, HSBC on Monday announced an agreement to acquire the U.K. division of the defunct Silicon Valley Bank tech startup lender.
HSBC reported that SVB U.K. has reached an agreement to be purchased by its U.K. ring-fenced subsidiary, HSBC UK Bank, for £1 ($1.21).
The parent company of SVB U.K.’s assets and obligations are not included in the deal.
.HSBC Group CEO Noel Quinn said the acquisition “strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the U.K. and internationally. 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.”
The arrangement “ensures consumer deposits remain secured and may bank as normal, with no public support,” British Finance Minister Jeremy Hunt said.
“The U.K.’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs.”
Hunt had stated on Sunday that the Bank of London and the U.K. government were attempting to “prevent or minimize” any possible harm brought on by the U.K. branch of SVB.
On Sunday, American authorities also authorized plans to support depositors and financial institutions connected to SVB’s American parent firm.
Both SVB and New York-based Signature Bank, which was shut down Sunday due to similar contagion worries, were recognized as systemic risks by the U.S. Treasury Department, allowing it to wind down both banks in a way that safeguards depositors.
With SVB U.S.’s failure on Friday, several prospective purchasers have filed offers to buy SVB U.K., amid widespread worry about the near fates of several British tech and health sciences businesses.
The Bank of London was one of the first bidders, but it seems like HSBC won the bet to purchase SVB for only £1.