Earlier today, HSBC announced that it had acquired Silicon Valley Bank UK for £1 in a transaction approved by UK banking regulators. SVB has been a top banking firm for venture-backed firms around the world, and its UK operation is perhaps the most prominent.
As Silicon Valley Bank in the US collapsed on Friday, fears of contagion rose across the entire banking sector. SVB operates in multiple jurisdictions – including its UK operations.
At first, SVB UK executives made a statement that with its separate balance sheet, it would be fine, but that was short-lived as the Bank of England soon announced SVB UK would be declared insolvent on Sunday. At the last minute, HSBC swooped in to purchase the bank – making it unnecessary for SVB UK to effectively go bankrupt.
John Glencross, CEO and co-founder of Calculus, an EIS fund provider, shared the following comment with CI:
“The speed of the response by the Treasury shows the importance it places on the UK technology and healthcare sectors and their contribution to the economy. The Prime Minister, Rishi Sunak reinforced this, stating he will always be on the side of entrepreneurs and innovators. The UK venture capital, start up and scaleup community should feel reassured by the outcome.”
Over 140 UK founders submitted a letter to the UK government demanding decisive action on the banking crisis, fearing an extinction-level event if SVB UK went under. This calamity has now been avoided as the UK government moved with rapidity to find a solution to the problem. So a huge disaster has been avoided for now, at least until the next financial crisis, which seems to be inevitable.
