SVB UK has handed out millions of pounds in employee bonuses just days after it was rescued by global banking giant HSBC for just 1 British pound.
Payouts to SVB UK employees and senior executives were approved “earlier this week,” according to a March 18 report citing unnamed sources. HSBC UK Bank, the organization that purchased SVB UK for 1 British pound ($1.22) on March 13, signed off on the payouts.
The amount given to Erin Platts, CEO of SVB UK, “or her senior colleagues,” was apparently “unclear,” although the sources defined the bonus pool as “small” and stated that it amounted “between £15m and £20m” (about $18.26 million and $24.35 million).
The bonuses would not have “been paid this week,” according to the sources, if SVB UK had “not been bought solvently.” One source reportedly “pointed out” that SVB UK’s close call had “made useless” the stock held by senior executives and other staff.
According to a second insider, the incentive payments were intended to honor “already negotiated payments” in an effort to “retain important workers” and were “a show of HSBC’s confidence in the talent pool” at SVB UK.
Previously, on March 17, SVB UK tweeted that it was “delighted” to join HSBC after spending 14 years promoting and expanding “the UK’s innovative economy.”
The Bank of England (BoE) shut down SVB UK’s operations on March 10 due to its “limited presence” and lack of “critical functions” sustaining the financial system, according to the BoE.
SVB UK will “cease making payments or receiving deposits,” according to the statement, as the BoE planned to ask the court to place SVB into a “bank insolvency proceedings.”
Meanwhile, SVB’s United States banking subsidiary has been placed under government ownership. As it searches for purchasers for its other assets, its holding company, SVB Financial Group, filed for Chapter 11 bankruptcy protection on March 17.
Using Chapter 11 will enable SVB Financial Group to “preserve value as it examines strategic alternatives for its prized businesses and assets,” according to William Kosturos, chief restructuring officer of SVB Group. Kosturos stressed that the autonomous teams that run SVB Capital and SVB Securities will continue to run those businesses.
