Thousands of global start-ups and technology companies were at the risk of not being able to access their accounts on Monday after the collapse of SVB last week. However, those holding accounts at the UK arm have been saved by HSBC who swooped in to secure the bank over the weekend.
SVB’s depositors at the UK arm will be relieved their cash will be available after HSBC’s £1 takeover of the bank. The move will also likely stem contagion to the rest of the banking system and prevent jobs losses at tech companies and start-ups.
“White knights are coming to the rescue after a weekend of intense negotiations to stem contagion from the SVB collapse, which sent shockwaves through financial and tech sectors. Investors are waiting with bated breath to see if this rush of regulatory activity to try and limit the fallout from the SVB bank collapse will help soothe volatile markets and so far the bold action appears to be working,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Nonetheless, the ‘white knights’ were unable to prevent a sharp selloff across the European equities. The banking sector was sold heavily in a risk-off trade, despite the assurances SVB depositor funds will be safe. There is no evidence larger institutions are facing the same problems as SVB.
Although the UK government claimed they facilitated the deal between HSBC and SVB, they avoided having to step in to bailout the bank with taxpayer’s money.
This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC
— Jeremy Hunt (@Jeremy_Hunt) March 13, 2023
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 should enjoy the optics of the government’s involvement in the deal ahead of his budget delivery this week.