HSBC’s £2 Billion Boost for SVB’s UK Unit Caps Frantic Weekend

Bloomberg2023-03-14

Lender bought SVB’s UK arm on Monday after weekend of talksExecutives reassure tech investors over post-acquisition plansHSBC Holdings Plc is planning to inject £2 billion ($2.4 billion) of liquidity ...

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Quinn described the acquisition as making “strategic sense” and said it would improve the bank’s standing in the technology and life-sciences sectors.A spokesperson for HSBC confirmed the injection.Quinn and Stuart indicated on the call that there wouldn’t be major changes to how SVB UK is run, according to Suzanne Ashman, general partner at LocalGlobe, a London-based venture investment firm. “We were hugely reassured,” she said. “They don’t want to lose the DNA of what they bought.”The bank didn’t clarify whether it would run its new acquisition as a standalone division or keep the SVB brand. The unit had loans of around £5.5 billion and deposits of around £6.7 billion as of March 10, according to HSBC’s statement.Weekend TalksThe injection marks the first phase of HSBC’s ownership after frantic talks over the weekend that saw the UK government try to broker a deal to stave off the collapse of SVB’s UK arm, which is a critical lender and service provider to a range of tech companies.As concerns rose on Friday about the health of SVB and its UK arm, London startups joined their US counterparts in looking to move money away from the bank. But, for many, SVB wasn’t responding.On Friday afternoon, Greg Lawton, the founder of the software firm Nodes & Links, sent his finance director to the bank’s London headquarters, a few blocks away from Silicon Roundabout, the nickname for London’s tech hub. A bank employee turned away the director, explaining that no one was around to handle the transaction.Then, late on Friday night, the Bank of England said it would put SVB UK into insolvency after after its parent company’s unsuccessful attempt to raise capital and a cash exodus from the tech startups had sparked a run on the bank.Some tech bosses began to consider the possibility that they couldn’t pay people. Text and WhatsApp threads blew up with company leaders seeking counsel or morsels of information, according to messages seen by Bloomberg.More co-ordination lobbying from the tech sector began early on Saturday. Dom Hallas, the executive director of Coadec, a tech advocacy organization, helped arrange for companies to cough up critical data to make the case to the government: how much they deposited with SVB UK and their burn rate, or how much they spent each month.An open letter from UK entrepreneurs and investors was sent to UK Chancellor of the Exchequer Jeremy Hunt, warning a loss of deposits might “cripple the sector and set the ecosystem back 20 years.”Meanwhile, Rothschild — the financial advisory firm hired by the board of SVB UK — invited a number of firms to take a look at the books of the UK subsidiary with a sale before the markets opened on Monday seen as the preferred outcome, according to people familiar with the matter.Other OptionsWithout any certainty around a resolution, other options were also being assessed as British officials including Hunt and City Minister Andrew Griffith weighed in. Parallel discussions were taking place between lenders and the Treasury about a potential plan to take on depositors from SVB UK in a bid to avoid widescale disruption in the tech sector and to try to calm markets.While there was other interest, including from the Middle East and UK firms including clearing bank Bank of London Group and OakNorth, HSBC’s Sunday bid swiftly emerged as the frontrunner thanks to the lender’s size and willingness not to seek government guarantees.With Prime Minister Rishi Sunak being briefed while aboard a flight to the US, the talks continued late into Sunday and included a call between Sunak and HSBC Chair Mark Tucker, according to a person familiar with the matter.The HSBC board convened around midnight to approve the deal. More calls followed as final details were ironed out before the sale was announced just an hour before the markets opened.Shortly after the deal was announced, one startup finally heard from SVB - an email from the bank notifying customers about the acquisition.“Firstly, please accept our apologies for the uncertainty caused over the last few days,” the email read. “We appreciate your patience.”","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":24,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1133696097"}