HSBC has agreed to buy the UK arm of collapsed US Silicon Valley Bank (SVB), bringing relief to UK tech firms who warned they could go bust without help.
Customers and businesses who have money deposited in SVB UK will be able to access it as well as other banking services as normal.
The Treasury said the deal with HSBC involved no taxpayer money and the Bank of England said deposits were secure.
HSBC said it paid just £1 for the SVB’s UK arm after it failed on Friday.
Silicon Valley Bank – which specialised in lending to technology companies – was shut down by US regulators on Friday in what was the largest failure of a US bank since 2008.
Its collapse sent shockwaves across the tech industry over the possible impact it could have on businesses, with some firms telling the BBC they could go bust if deposits were not secured.
Noel Quinn, HSBC Group chief executive, said UK customers of SVB would be able to bank as usual with deposits safe.
Chancellor Jeremy Hunt said he had worked over through the weekend to come up with a solution with the prime minister and the Bank of England governor.
The Bank of England said no other UK banks had been “materially affected” by SVB’s collapse and said the wider banking system remained “safe, sound, and well capitalised”.
Although the UK arm of SVB was small with just over 3,000 business customers, its collapse would have presented a risk for a sector which the government views as pivotal to the UK’s future economic success.
Mr Hunt said such firms were often “fragile”.
“Some of them only had bank accounts with SVB UK and so for that reason we were faced with a situation where could have seen some of our most important companies, our most strategic companies, wiped out and that would have been extremely dangerous,” he added.
But Mr Hunt insisted there was “never a systemic risk to our financial stability in the UK”.
Sebastian Weidt, chief executive of Universal Quantum, a tech company which employs about 40 people and held all its funds with SVB, the deal was a “huge relief”.
He said the last 48 to 72 hours had been “unbelievably stressful” and said while his company had been trying to make plans to mitigate the potential impact, had a deal not been made it would have been “pretty detrimental to the whole sector”.
HSBC’s purchase of SVB’s UK arm comes after the US Federal Reserve and Federal Deposit Insurance Corporation (FDIC) said on Sunday that depositors in the US would be fully protected.
SVB collapsed in the US on Friday after failing to raise $2.25bn (£1.9bn) to plug losses from the sale of assets, mainly US government bonds, that were affected by higher interest rates.
Its problems prompted a run on the bank in the US and sparked fears in the wider banking sector, with more than 200 bosses of UK tech companies signing a letter addressed to Mr Hunt calling for the government to step in.
Source – BBC News