Global banking organization HSBC Holdings is stepping in to save the United Kingdom-based branch of the defunct Silicon Valley Bank (SVB) by acquiring it for one pound ($1.21).
On March 13, HSBC formally stated that Silicon Valley Bank UK Ltd would be acquired by its subsidiary HSBC UK Bank for one British pound sterling (GBP), or $1.21.
According to HSBC’s release, SVB UK has deposits of about 6.7 billion GBP ($8.1 billion) and loans of about 5.5 billion GBP ($6.7 billion) as of March 10, 2023.
SVB UK reported a profit before tax for the fiscal year that ended on December 31, 2022, of 88 million GBP ($107 million). The tangible equity of SVB UK is anticipated to be in the range of 1.4 billion GBP ($1.7 billion).
The assets and liabilities of the parent firms of SVB UK are excluded from the transaction, according to HSBC’s letter, which also states that the final computation of the gain resulting from the acquisition will be delivered in due time. The corporation also stated that the acquisition will be swift and supported by already available resources.
The acquisition, in the words of HSBC Group CEO Noel Quinn, “makes tremendous strategic sense” for HSBC’s operations in the UK, strengthens its commercial banking franchise, and improves our capacity to service innovative and rapidly expanding companies.
Quinn said: “We welcome SVB UK’s clients to HSBC and look forward to assisting them in expanding in the UK and beyond.” She continued:
“SVB UK 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 announcement comes just after U.S. authorities ordered SVB to cease operations on March 10, which sent panic through the cryptocurrency markets due to the bank’s considerable exposure to prominent companies like Circle and Coinbase.
Due to the collapse of SVB, Circle, the creator of Dollar Coin (USDC), the second-largest stablecoin by market value, was unable to withdraw $3.3 billion from its $40 billion in reserves. Counting on a full recovery, Coinbase has about $240 million in corporate money at Signature.
Despite having $250 stuck at Signature, Paxos, the company behind stablecoins including Pax Dollar (USDP) and the controversial Binance USD (BUSD) stablecoin, assured customers that the cost will be covered by its private insurance.
