HSBC buys failed Silicon Valley Bank's UK arm for just 1 pound

London: The UK arm of failed Silicon Valley Bank has been bought by HSBC Holdings for just 1 pound ($1.21), HSBC announced on Monday.

"HSBC Holdings plc announces that its UK ring-fenced subsidiary, HSBC UK Bank plc, is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1," HSBC said in a release. As of March 10, 2023, SVB UK had loans of around 5.5 billion pound and deposits of around 6.7 billion pound.

HSBC will update shareholders on the acquisition at its first quarter 2023 results on May 2, 2023.

"SVB UK's tangible equity is expected to be around £1.4bn. Final calculation of the gain arising from the acquisition will be provided in due course. The assets and liabilities of the parent companies of SVB UK are excluded from the transaction. The transaction completes immediately. The acquisition will be funded from existing resources," the release said.

"This acquisition makes excellent strategic sense for our business in the UK. 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 UK and internationally," Noel Quinn, HSBC Group CEO said.

"We welcome SVB UK's customers to HSBC and look forward to helping them grow in the UK and around the world. 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."

Quinn said they warmly welcome SVB UK colleagues to HSBC and are excited to start working with them.

HSBC UK serves over 14 million customers across the UK.

The US-based Silicon Valley Bank collapsed on Friday. The crisis-hit Silicon Valley Bank's shares tumbled over 60 per cent, data showed.

Right after the US-based bank collapsed, the US government and regulators on Sunday (local time) said the actions taken so far demonstrate their commitment to ensuring that depositors' savings remain safe.