Banking giant HSBC is set to acquire the U.K. arm of failed lender Silicon Valley Bank.
HSBC announced the purchase Monday (Mar. 13) morning, saying it would pay one British pound to buy Silicon Valley Bank (SVB) UK.
The news followed a weekend in which regulators on both sides of the Atlantic scrambled to find buyers for the tech-startup-focused SVB and to fend off a larger banking crisis.
“This acquisition makes excellent strategic sense for our business in the U.K.,” Noel Quinn, HSBC Group CEO, said in a news release. “It 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 was taken over by the regulators last week following a run on deposits. It was the second-largest U.S. bank failure on record, and the first bank of its size to fold since the 2008 financial crisis. It came just days after the crypto-focused lender Silvergate shut its doors.
U.S. regulators on Sunday said the bank’s depositors would be covered beginning Monday, while the Federal Reserve said it will provide additional funding to “eligible depository institutions” to make sure banks can meet their depositors’ needs.
That announcement followed the collapse of a third financial institution, Signature Bank, which reportedly experienced its own run in the wake of the SVB news.
A report by the New York Times Sunday – citing unnamed sources – said Signature saw a flurry of deposits leave the bank following SVB’s collapse, with customers calling the bank to make sure their finances were safe.
As with SVB, regulators from the New York Department of Financial Services and the Federal Deposit Insurance Corporation (FDIC) stepped in and took over Signature Sunday (Mar. 12).
“All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer,” the Federal Reserve, FDIC and U.S. Treasury said in a joint statement Sunday.
In England, meanwhile, the country’s central bank last week placed SVB UK into an insolvency procedure to dull the impact of the collapse and protect British companies from major losses.
The Bank of England noted that SVB UK, “has a limited presence in the U.K. and no critical functions supporting the financial system. In the interim, the firm will stop making payments or accepting deposits.”
PYMNTS reported Sunday that another U.K. bank, the Bank of London, had also made an offer for SVB UK.
“Silicon Valley Bank cannot be allowed to fail given the vital community it serves,” Anthony Watson, the bank’s co-founder and CEO, said in a statement. “This is a unique opportunity to ensure the U.K. has a more diversified banking sector, whilst allowing continuity of service to SVB’s U.K. client base.”