According to an HSBC UK filing dated March 13, the company has completed the Silicon Valley Bank’s UK branch purchase for $1.21.
The acquisition means customers of the British branch of Silicon Valley Bank are now allowed to continue banking as usual. HSBC Group CEO Noel Quinn told the bank’s depositors not to worry about their funds as they are backed by the safety and strength of his company.
The United Kingdom finance ministry issued a statement saying that the clients of Silicon Valley Bank UK can access their deposits from today. At the same time, Jeremy Hunt, the country’s Chancellor of the Exchequer, tweeted that deposits would be protected without any taxpayer support.
Silicon Valley Bank UK Clients
Similar to its parent firm in California, the client of Silicon Valley Bank UK are mostly companies in the startup and tech world. The HSBC UK filing shows that the bank holds approximately $8.2 billion in deposits and about $6.5 billion in loans.
Hunt says the resumption of Silicon Valley Bank would boost the British economy by promoting the UK’s tech industry, creating jobs for thousands of people.
The Silicon Valley Bank Crisis
Silicon Valley Bank went crumbling down last week after suffering a liquidity crisis fueled by a bank run and rising interest rates.
Considering the attractive rates for conservative assets such as Treasuries, Silicon Valley Bank had decided a few months ago to convert its cash into US Treasuries, both short-term and long-term. That’s according to Stephen Forte, the Fesco Capital managing partner.
However, the current harsh economy forced the bank’s clients to make significant withdrawals to keep their business afloat. The increased withdrawals prompted Silicon Valley Bank to sell its Treasuries at a loss to enable customers to continue withdrawing their funds.
But things got worse when rumors started that the bank was seeking a buyer and faced a serious liquidity problem. As a result, many crypto venture capitalists advised their clients to pull their money from the financial institution leading to its fall on Friday afternoon.
The Federal Deposit Insurance Corporation has since taken over the bank’s operations.