A British bank stepped in to buy collapsed California tech lender Silicon Valley Bank’s British arm for the equivalent of $1.21.
HSBC announced the deal for one British pound on Monday, following marathon talking through the night with federal officials. The deal does not include the assets or liabilities of the failed bank’s parent company, but is a first step toward sorting out the bank whose failure was announced Friday.
The acquisition “strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the U.K. and internationally,” said HSBC Group CEO Noel Quinn. “SVB U.K. customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC.”
It was not immediately known how much the British subsidiary of the failed bank had in assets or liabilities. The deal came as major North American lenders PNC Financial Services and Royal Bank of Canada both said they were not interested in taking over Silicon Valley Bank, which was the nation’s 16th largest lender.
The Federal Deposit Insurance Corp. is trying to find a bank with the funds and desire to take over the California bank, which was closed by the California Department of Financial Protection and Innovation and taken over by the FDIC.
The bank collapsed after a run on deposits following heavy losses from the liquidation of a $21 billion bond portfolio. The bank was a key player in the cryptocurrency, venture capital and tech sectors. The failure was the biggest since Washington Mutual in 2008.
Although the FDIC only insures deposits up to $250,000, President Joe Biden insisted on Monday that depositors would get all their money back without a taxpayer-funded bailout. How that might happen is not clear.
On Sunday, another lender, New York-based Signature Bank, was closed down by state regulators and seized by the FDIC. In addition to both banks being heavily invested in volatile cryptocurrencies, they also were advocates of so-called Environmental, Social, and Governance policies, which put woke ideologies ahead of maximizing profits.