Delight in Cambridge as Silicon Valley Bank UK acquired by HSBC for £1
The tech sector breathed a huge sigh of relief this morning after it was announced that Silicon Valley Bank UK (SVB UK) has been sold to HSBC for £1 in a deal facilitated by the Bank of England.
Silicon Valley Bank, which is headquartered in Santa Clara, California, had been placed in receivership with the US Federal Deposit Insurance Corp on Friday.
The UK bank – entirely unconnected to the US bank in terms of governance and balance sheet assets – was due to go into insolvency yesterday evening. With 40-50 per cent of UK tech startups banking with SVB UK, it started to look as if a major catastrophe was about to befall the Cambridge tech sector.
Then, this morning (March 13), came the announcement headlined ‘Government and Bank of England facilitate sale of Silicon Valley Bank UK’.
The statement from the Treasury read: “Silicon Valley Bank (UK) Ltd has today been sold to HSBC. HSBC is headquartered in London, is the largest bank in Europe and is one of the world’s largest banking and financial services institutions, serving 39 million customers globally. “Customers of SVB UK will be able to access their deposits and banking services as normal from today.
“This transaction has been facilitated by the Bank of England, in consultation with the Treasury, using powers granted by the Banking Act 2009. No taxpayer money is involved, and customer deposits have been protected.
“Making use of post-crisis banking reforms, which introduced powers to safely manage the failure of banks, this sale has protected both the customers of SVB UK and taxpayers.”
Chancellor Jeremy Hunt said: “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, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.”
HSBC stated: “Today we’ve acquired Silicon Valley Bank UK for £1. SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC.
“We’re proud that we’ve been able to act quickly to support the UK’s fast-growing and dynamic technology sector and the important role that it plays in the UK economy.”
In Cambridge, the news was a stay of execution.
Jason Mellad, CEO and co-founder of healthcare accelerator Start Codon, told the Cambridge Independent: “It’s been fantastic to see the entire sector and our supporters rally together with government and HSBC to protect the innovators fighting for a better future. We must never take our privileged positions for granted and will work even harder to translate innovation into better clinical outcomes and positive societal impact.”
SVB UK had 3,500 customers, with loans of around £5.5bn and deposits of about £6.7bn. The crucial takeaway – that SVB UK customers can access their deposits and banking services as normal from today, thrilled the Cambridge tech sector.
George Neville-Jones, co-founder of Cambridge Future Tech, praised the involvement of HSBC’s Cambridge team in the successful outcome.
“A hard stop to SVB UK's operations would have been massively negative for the commercialisation of innovation in the UK,” he said. “The acquisition of SVB UK by HSBC avoids that perfectly.
“The continuation of service for SVB UK customers is testament to the exceptional work of the UK Government, banking industry and investment community over the weekend.”
Neville-Jones added: “HSBC’s tech sector specialist banker in Cambridge, Jamie Bignall, has long been a positive force for our fast growth companies. It is fantastic to see his star rise higher with this development. Jamie spent the weekend in contact with companies impacted, before he even knew of HSBC's role in the rescue. He just wanted to see his sector survive."
“Excellent to see this incredible leadership at a time of crisis,” said Sherry Coutu, chair, SID and FTSE 100 NED on Linkedin. “So many people from the banking, tech industry and Treasury came together to make this happen. They all deserve our thanks and admiration.”