HSBC, a leading bank in the United Kingdom has stepped forward to buy the UK division of the Silicon Valley Bank, which has recently undergone a sudden collapse. This will be a great support to the technological firms in the UK, which were facing potential challenges due to this setback. The customers and corporate bankers who were facing transaction issues will now be able to withdraw the money normally as earlier.
The UK government and the Bank of England together have worked out the solution together and reached a deal where there is no involvement of money from taxpaying citizens. The Silicon Valley Bank was a pillar of financial support to the IT sector in the United Kingdom, and its closure has created anxiety among the depositors regarding a negative impact on the businesses.
UK Chancellor Jeremy Hunt has commented that some firms only had bank accounts linked with the Silicon Valley Bank, which was concerning given that the UK’s most important companies and strategic partnerships were at risk of getting wiped out. He added, however, that there was no systemic risk to the financial stability in the UK.
Discussions have been held between the Chancellor, the UK Prime Minister, the governor of the Bank of England, civil servants, and HSBC management. The Bank of England has concluded that there has been no material effect on the UK banking system following the collapse of SVB, and that it is safe, sound, and well-capitalized. The shuttering of the UK arm of the bank, although small with just over 3,000 customers, could have significantly affected the tech sector, which has been hailed by the government as integral to the nation’s economic success.
At the time when HSBC took over, the Silicon Valley Bank UK had sufficient capital and was making substantial profit, even while its US counterpart was struggling. According to the Bank of England, this move was a preemptive intervention to protect the bank’s UK arm from the repercussions of its collapse in the US.
Source Credit: https://www.bbc.com/news/business-64937251