The government has struck a last-minute deal for HSBC to buy Silicon Valley Bank’s UK operations, saving thousands of British tech startups and investors from big losses after the biggest bank failure since 2008.
The takeover will override the Bank of England’s initial decision to place SVB UK into insolvency, after a run on the lender that was originally sparked by fears over the a multibillion-pound shortfall on the US parent company’s balance sheet. The US bank was closed and its assets seized by authorities on Friday.
“This morning, the government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC Deposits will be protected, with no taxpayer support I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise,” the chancellor, Jeremy Hunt, said on Twitter.
HSBC’s takeover is expected to protect the finances of SVB UK’s 3,500 customers, including hundreds of tech startups that feared they would go bust if their deposits were wiped out.
Authorities had been considering a range of options to help SVB UK customers pay wages and suppliers, including an emergency fund that could provide a cash lifeline to support startups, as well as government-guaranteed loans for the sector, similar to those offered to businesses during the Covid crisis.
It follows a tense 72 hours, with Rishi Sunak having been locked in weekend talks with the Bank of England governor, Andrew Bailey, and Hunt, who warned that tech and life sciences sector were at “serious risk” as a result of the bank’s collapse.
While analysts said there was little chance of contagion across the banking sector – given that the biggest banks serve a wider range of customers and have plenty of
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