HSBC buys UK wing of failed US bank SVB

HSBC has bought the United Kingdom wing of the collapsed United States financial company Silicon Valley Bank, or SVB, in a move the BBC says will soothe scores of worried British technology companies.

HSBC, the British-based multinational bank that is the largest in Europe by total assets, stepped in after SVB business customers had been unable to withdraw money following the institution's collapse on Friday.

The deal was reached on Sunday night, and in place before Monday trading began.

The British government said no taxpayer money was involved in the transaction, which was completed for a nominal pound.

The BBC said the deal followed talks that involved finance minister Jeremy Hunt, the prime minister, the governor of the Bank of England, and senior managers at HSBC.

The UK wing of the bank, known as SVB UK, had around 3,000 business customers; mainly from the technology sector.

Hunt told the BBC: "Some of them only had bank accounts with SVB UK and so, for that reason, we were faced with a situation where we could have seen some of our most important companies, our most strategic companies, wiped out."

The deal came as the US authorities raced to contain the fallout from SVB's failure, and after regulators closed a second technology-friendly bank on Sunday.

With more than $110 billion in assets, Signature Bank became the third-largest bank failure in US history.

The US also unveiled sweeping measures to rescue depositors' money in full from SVB, and promised other institutions help in meeting their customers' needs.

In a joint statement, financial agencies, including the US Treasury Department, said SVB's depositors would have access to "all of their money" starting from Monday, and that taxpayers would not foot the bill.

The US Federal Reserve, the Federal Deposit Insurance Corporation — or FDIC — and the Treasury Department said depositors at Signature Bank, a New York-based lender with significant cryptocurrency exposure, would also be "made whole".

And in a potentially major development, the Fed announced it would make extra funding available to banks, so they can meet the needs of depositors, Agence France-Presse said.

The FDIC guarantees deposits, but only up to $250,000 per client and per bank.

Federal banking law in the US, however, does allow the FDIC to protect uninsured deposits, if a failure to do so would pose systemic risks, The Washington Post reported.

Regulators took control of SVB on Friday. The medium-sized bank had been a key lender to US startups since the 1980s but succumbed to a run on deposits.

Treasury Secretary Janet Yellen said on Sunday the nation would not bail the bank out, and that it wanted to focus on avoiding the collapse impacting other institutions.

Yellen told CBS News the US government wanted "to make sure that the troubles that exist at one bank don't create contagion to others that are sound".

The collapses followed investors punishing the banking sector on Thursday after SVB disclosed the extent of its troubles the day before.

Despite attempts by US officials to calm the financial markets, regional lenders remained under pressure; including First Republic Bank, which slumped nearly 30 percent in two sessions on Thursday and Friday, and Signature Bank, which lost a third of its value.

The SVB collapse was the largest bank in the US to fail since the loss of Washington Mutual in 2008.

Agencies contributed to this story.

Contact the writers at earle@mail.chinadailyuk.com