HSBC, one of the world’s largest banking and financial services institutions, has acquired Silicon Valley Bank (SVB). They acquired the now-bankrupt UK branch VB for £1. This purchase was welcomed by the community as the acquisition is set to protect the deposits of SVB UK’s clients. The UK government and the Bank of England have facilitated the private sale. Through a tweet, Jeremy Hunt ensures that no “taxpayer money” will be used.
The deal comes as the 16th largest bank in the US went bankrupt. The US Treasury Department, The Federal Reserve and the Federal Deposit Insurance Corporation made a public statement earlier this week. They promised that US deposits will be paid in full. The UK branch of SVB has deposits totaling over £6 billion, with loans worth more than £5.5 billion. Despite this, SVB UK’s pre-tax profits for 2022 totaled £88 billion.
The acquisition of the UK branch of Silicon Valley Bank by HSBC is considered a strategic move by the Twitter community. According to experts, this acquisition may enhance HSBC’s ability to serve its ever-growing client base. According to Noel Quinn, the CEO of HSBC Group, it will also strengthen the commercial sector of the group. The move appears to be negative for HSBC in the eyes of its shareholders. The group has recently come under fire from shareholders over its strategy. Some are even calling for a split between its Asian and European operations.
The United Kingdom Kept Its Promise To The Tech Sector
Jeremy Hunt also stated that the government is fulfilling its promise to protect the UK’s tech sector. The deal is a prime example of the UK government’s commitment to the tech sector. Through taking such action, the government seeks to attract more international investments. This acquisition also raises questions about the future of smaller UK-based banks. Currently, competition in the market is likely to grow even bigger. The acquisition should end by May 2023, with HSBC updating shareholders on the future of the deal. As for the cryptocurrency community, there are many who believe that the recent acquisition will help HSBC to create a pilot CBDC.