HSBC Holdings plc's HSBC UK has announced the acquisition of Silicon Valley Bank UK LTD.
SVB Financial Group is discussing an acquisition that does not include its commercial bank, which is under US control.
Kim Dotcom warns of significant risks in the banking sector, the US Treasury Department's actions are only temporary.
HSBC Holdings plc has announced that its UK ring-fenced subsidiary, HSBC UK Bank plc, has acquired Silicon Valley Bank UK Limited (SVB UK) for a nominal amount. meaning 1 pound (£1). SVB UK had loans of around £5.5 billion and deposits of around £6.7 billion as of 10 March 2023. For the financial year ending 31 December 2022, SVB UK recorded pre-tax profits of £88m and expected tangible equity of around £1.4bn.
CEO of HSBC Group, Noel Quinn added:
This acquisition makes great strategic sense for our UK business. It strengthens our commercial banking franchise and enhances our ability to serve fast-growing and innovative companies, including across the technology and life sciences sectors, in the UK and internationally .
On the other hand, sources said J.P. Morgan and PNC are also in talks to acquire SVB Financial Group, but the deal would not involve the commercial bank, which is currently under US government control.
According to recent Reuters reports, potential bidders for SVB Bank have begun to lose interest in the process. Meanwhile, US regulators intervened by providing support to the bank on Sunday evening.
Businessman Kim Dotcom tweeted on March 13 that the banking sector is currently facing serious risks due to unrealized losses amounting to $620 billion, despite having a total equity capital of $620 billion. maybe 2.2 trillion USD. In the event of a mass withdrawal, even large institutions such as JP Morgan and Citi could be severely affected, potentially leading to unpredictable consequences. The crisis is far from over, and actions by the U.S. Treasury Department have only temporarily mitigated risks.
620 billion USD in unrecorded losses, total equity is 2.2 trillion USD. If a sustained run occurs, it could cause bankruptcy even for some major US banks such as JP Morgan and Citi. This crisis is not over. The US Treasury is simply buying more time.
—Kim Dotcom (@KimDotcom) March 13, 2023
Additionally, Apollo Management and Morgan Stanley are also said to be involved in talks around the holding company, with Apollo potentially interested in funding a transaction or acquiring parts of the business. . The three subsidiaries within SVB Financial Group are much smaller than SVB Bank, which is currently under the control of the Federal Deposit Insurance Corporation (FDIC), according to the company's 2022 10K report.
Meanwhile, Bank of London has submitted a proposal to acquire Silicon Valley Bank UK, a subsidiary of SVB Financial Group. The company announced on Sunday that it had submitted the proposal to British authorities, including the Treasury and the Bank of England.
The post ‘UK Bank HSBC Acquires UK Silicon Valley Bank With Rescue Agreement’ was first published on Coin Edition.