HSBC announced the acquisition of the UK branch of Silicon Valley Bank for a symbolic one pound on Monday.
The news arrived after the American authorities took relevant measures to strengthen the banking system and escape the consequences of the Silicon Valley Bank’s collapse.
Over the weekend, the government along with the regulatory authorities and potential buyers were having feverish negotiations in an attempt to save SVB. Eventually, the UK arm of the technology lender decided to take the world's largest bank with assets totaling $2.9 trillion under its wing.
The UK’s Finance Minister Jeremy Hunt said that British customers of Silicon Valley Bank do not have to worry about the strength and reliability of HSBC. The Ministry of Finance also has no intention to use the funds of British taxpayers as this is one of its key priorities.
On the part of the Bank of England, arranging this sale was a necessary measure aimed at building confidence in the financial system and keeping any possible implications for UK tech companies down to a minimum.
Thanks to this deal, it was possible to keep all deposits in the UK branch of Silicon Valley Bank safe while ensuring the security of the entire banking system.
Against the backdrop of global market turmoil caused by the SVB crash, Britain's FTSE 100 blue-chip index fell 1% in early trading after being down 1.7% on Friday. Meanwhile, HSBC stocks fell 1.7%.
Silicon Valley Bank which focuses on tech startups collapsed on Friday becoming the worst bank failure in the United States since the 2008 subprime mortgage crisis.
This has become a big threat to British tech companies considering the importance of the lender to some clients. More than 250 executives of UK tech companies have warned that its bankruptcy poses an "existential threat" to the sector.
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