One pound sterling (GBP) to keep SVB UK going. HSBC Bank has bought the UK subsidiary of Silicon Valley Bank (SVB) for a symbolic £1. The move is designed to allow customers to continue trading. We look at the consequences of the US bank run in the UK and elsewhere in the world
HSBC UK to buy SVB’s UK subsidiary
A rescue across the Channel. As the US Federal Reserve pulled out the stops to save SVB and its sister bank Signature, the consequences of the bank run have begun to spread beyond the US. Customers of SVB’s UK subsidiary have been left without a solution since the collapse of the parent company, and without a way to conduct their business.
British Prime Minister Rishi Sunak and the Bank of England have been holding discussions all night with the local HSBC subsidiary in order to find a solution. And it has just been found: HSBC UK is buying SVB UK for a symbolic one pound. The takeover is effective immediately and should allow the bank’s customers to transfer and withdraw funds, or any other usual action. The news was confirmed by Jeremy Hunt, the UK Chancellor of the Exchequer:
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
– Jeremy Hunt (@Jeremy_Hunt) March 13, 2023
According to the Financial Time, several potential buyers were in the running. British banks in particular, such as OakNorth or the Bank of London… But also a mysterious buyer from the Middle East. However, the negotiations ended in favour of the British subsidiary of the giant HSBC.
In total, SVB UK had more than 6 billion dollars in outstanding loans, and its customers’ deposits reached more than 8 billion dollars. Jeremy Hunt says that the deposits will be protected “without taxpayer support”. Like the US Treasury, the UK government is taking great care not to give the impression that it is the savings of the public that will save the banks.
Is the contagion spreading to the UK?
I’m not sure if it’s a good idea to go to a bank or not, but I’m not sure if it’s a good idea to go to a bank or not,” he said. In the stock market, banking stocks are plummeting this morning: the Credit Suisse share, for example, has reached an all-time low. In the UK in particular, the UK100 index, which includes the 100 largest capitalisations on the London Stock Exchange, has plunged sharply:
UK100 plunges sharply in a particularly tense environment
Will the contagion spread elsewhere in Europe? This is of course the question being asked on the Old Continent. In France, Finance Minister Bruno Le Maire was reassuring on France Info this morning:
The Minister of Public Accounts also said that French banks were not directly exposed to SVB. However, a wind of panic seems to be blowing in France as well. The CAC40 is down sharply this morning, posting -2.57%. What is certain is that we cannot predict at this stage the full effects of the fall of the two American banks. The week will therefore be crucial for the banking sector
