HSBC buys stricken SVB UK for symbolic £1, saving thousands of UK technology businesses from financial turmoil
Around 3,000 UK tech businesses have been saved following HSBC buying the UK arm of collapsed Silicon Valley Bank.
HSBC bought the UK arm of SVB for a symbolic one pound, following intervention by the Government.
Silicon Valley Bank UK has around 3,000 technology business customers with deposits of around £6.7bn and £5.5bn out on loan.
SVB UK recorded a profit before tax of £88m in the year ending December 31 2022.
Businesses left dangling after the sudden collapse of SVB’s US parent include nPlan, which makes software for public construction projects such as railway HS2 and nuclear power plant Hinkley Point C; Oxford Medical Products, which has developed a gel pill which acts like a gastric balloon for cheaper obesity treatment; educational technology platform Lingumi, which uses AI for online tutoring; and Heights, which manufactures brain supplements used by celebrities including Stephen Fry and Russell Brand.
The collapse of California-based SVB, following a bank run triggered by investor panic about its balance sheet, is the biggest US bank failure since 2008.
The overnight Government rescue mission was led by Prime Minister Rishi Sunak – himself on California’s West Coast today – Chancellor Jeremy Hunt and Bank of England governor Andrew Bailey, along with City minister Andrew Griffith and Sam Woods of the Prudential Regulation Authority, according to the Financial Times.
Hunt said on Twitter: “The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs. I said yesterday that we would look after our tech sector.”
Not that he had much option. An indicator of the scale of the carnage if the Chancellor had not intervened, just as Britai n rebrands itself as a frontrunner in technology and science, can be seen in the petition signed by just 260 SVB UK business customers, which between them employed 14,000 people.
Hunt added: the sale of SVB UK to HSBC “ensures customer deposits are protected and can bank as normal, with no taxpayer support”.
Noel Quinn, chief executive of HSBC, said that SVB’s British customers could continue to bank as usual, “safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC”.
Quinn added the acquisition made strategic sense for its business in the UK. “It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally.”
Other bidders for SVB UK included British banks OakNorth and the Bank of London, along with one Middle East investor, according to the Financial Times.
However, the British tech businesses which are now HSBC customers may find it a different experience to banking with a specialist tech start-up bank which understands their needs.
Prior to today’s HSBC announcement, nPlan co-founder Dev Amratia, told the Sunday Times: “High street banks have no sense of how to handle the pace at which companies like ours grow, they can be abysmal to deal with and take weeks to do things.”
Four tech investment trends to watch out for in 2023 – What are the hot areas for tech investors to be putting their money into? Daniel Bailey of ECI Partners looks into his crystal ball