HSBC Snaps up Collapsed Silicon Valley Bank UK as World Races to Stem Fallout
Steps to prevent a global banking crisis after the historic demise of Silicon Valley Bank (SVB) continued Monday, with governments in the UK, France, and Israel joining the U.S. to reassure institutions exposed to the fallout.
AP reports the UK Treasury and the Bank of England announced they had facilitated the sale of Silicon Valley Bank UK to HSBC, Europe’s biggest bank, thus ensuring the security of 6.7 billion pounds ($8.1 billion) of deposits.
A nominal £1 ($1.2) was paid for the acquisition.
British officials worked throughout the weekend to find a buyer for the UK subsidiary of the California-based bank. Its implosion was the second-largest bank failure in history, as Breitbart News reported, and the largest failure of a bank since the 2008 financial crisis.
The UK Chancellor, Jeremy Hunt, said the deal has protected all customer deposits without involving taxpayer cash.
Regulators also announced late Sunday that New York-based Signature Bank had failed and was being seized. At more than $110 billion in assets, Signature Bank is the third-largest bank failure in U.S. history.
Also Sunday, another beleaguered bank, First Republic Bank, announced it had bolstered its financial health by gaining access to funding from the Fed and JPMorgan Chase.
In an effort to shore up wider confidence in the banking system, the Treasury Department, Federal Reserve and FDIC said all Silicon Valley Bank clients would be protected and able to access their money, the AP report set out. Steps intended to protect the bank’s customers and prevent additional bank runs are also in the pipeline.
“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said in a joint statement as U.S. President Joe Biden called for calm.
Under the plan, depositors at SVB and Signature Bank, including those whose holdings exceed the $250,000 insurance limit, will be able to access their money on Monday.
Israel Prime Minister Benjamin Netanyahu said his government would assess the effect of SVB’s collapse on Israeli companies and determine whether or not to assist them.
Israel is home to a vibrant high-tech industry, and local media said hundreds of local firms could be exposed to the financial contagion.
The twin bankruptcies of SVB and Signature do not pose a danger to French financial institutions, Finance Minister Bruno Le Maire reassured investors Monday.
“I don’t see any risk of contagion, so there’s no special warning” to issue to local lenders, Le Maire told broadcaster FranceInfo.
France’s banks and financial system were “solid” with “a high liquidity ratio” to withstand shocks, added Le Maire.