HSBC Holdings Buys Silicon Valley Bank’s UK Unit for £1 

HSBC Holdings Plc (HSBA) said its U.K ring-fenced subsidiary, HSBC U.K. Bank, is acquiring Silicon Valley Bank U.K. (SVB U.K.) for 1 British pound (US$1.21), as per a filing.

On March 13, HSBC Holdings stated that its subsidiary, HSBC UK Bank, is purchasing Silicon Valley Bank UK (SVB UK) for one British pound ($1.21). SVB UK has loans of around 5.5 billion pounds ($6.7 billion) and deposits of approximately 6.7 billion pounds ($8.1 billion) as of March 10, 2023, according to HSBC’s release. SVB UK reported a profit before tax of 88 million pounds ($107 million) for the fiscal year ended December 31, 2022. The tangible equity of SVB UK is projected to be in the region of 1.4 billion pounds ($1.7 billion).

“Final calculation of the gain arising from the acquisition will be provided in due course,” HSBC Holdings wrote, adding that the assets and liabilities of the parent companies of SVB UK are excluded from the transaction.

The company added that the acquisition would be funded from existing resources and would be completed immediately.

According to HSBC Group CEO Noel Quinn, the acquisition makes “excellent strategic sense” for HSBC’S business in the United Kingdom, strengthens its commercial banking franchise, and enhances its ablity to serve innovative and fast-growing firms. 

“We welcome SVB UKs customers to HSBC and look forward to helping them grow in the UK and around the world,” Quinn said, adding:

“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 revelation comes after US regulators ordered SVB to cease operations on March 10, causing fear in crypto markets because certain large crypto businesses, such as Circle and Coinbase, had considerable exposure to the bank.

Crypto Companies in SVB Dilemma

The issuer of USD Coin (USDC), the second largest stablecoin by market value, is unable to withdraw $3.3 billion of its $40 billion reserves owing to SVB’s collapse. Coinbase held around $240 million in corporate money at Signature and expects to recover the whole amount. PaxOs, the issuer of stablecoins like Pax Dollar (USDP) and the controversial Binance USD (BUSD) stablecoin, too had $250 million delayed at Signature but claimed that it will be covered by private insurance.