The FCA and PRA have given HSBC its approval.
New Delhi: Once Silicon Valley Bank went under, leaving behind billions of dollars in deposits, HSBC purchased the UK division of the firm. The UK branch of Silicon Valley Bank will be sold to HSBC UK Bank Plc, the Bank of England announced in a statement on Monday, following discussions with the Prudential Regulation Authority (PRA), HM Treasury (HMT), and the Financial Conduct Authority (FCA).
The FCA and PRA have given HSBC its approval. According to the UK central bank, the measure was taken to support financial system trust, stabilise SVBUK, assure the continuity of banking services, and minimise damage to the UK technology sector.
Read More: Indian Oil Joins Hands With Kotak Mahindra Bank To Launch Fuel Credit Card
As a result of this transaction, the central bank and the government “can ensure that all depositors’ money with SVBUK is safe and secure,” the statement read. All services will continue to be provided as usual, and SVBUK will continue to run the UK division of SVB normally. According to the Bank of England, customers wouldn’t notice any changes.
Also, it let clients know that they could still use the standard channels and make loan payments according to schedule. The employees will continue to work for SVBUK.
The Bank of England also indicated that the announcement from Monday supersedes the one from March 10 in which it was stated that, in the absence of any pertinent new information, it intended to ask the court to put SVBUK under Bank Insolvency Process.
“Neither these proceedings nor the resolution of SVBUK’s US parent bank has a direct, significantly negative impact on any other UK institutions. The overall UK banking system is still stable, strong, and well-capitalized, the report stated.
SVBUK reported that its entire balance sheet size at the time of failure was close to 8.8 billion pounds and that its deposit base was close to 6.7 billion pounds.
Read More: After Silicon Valley Bank, Now New York-Based Signature Bank Collapses
Jeremy Hunt, a South West Surrey MP, addressed the situation on Twitter “This morning, a private sale of Silicon Valley Bank UK to HSBC was made possible by the government and the Bank of England. Deposits will be safeguarded without assistance from the taxpayer. I promised to protect the IT sector yesterday, and we have been working hard to keep that pledge.”
This outcome comes after the Federal Deposit Insurance Corporation was designated to assume control of the lender’s deposits by California banking authorities on Friday after closing startup-focused Silicon Valley Bank. The last bank to fail that was insured by the Federal Deposit Insurance Corporation occurred in October of 2020, and SVB is the first one to do so in more than two years.
