The deal, which is being monitored by the Bank of England and the Treasury, comes after SVB collapsed on Friday, sparking panic in Britain over its clients in the technology and life sciences sectors.
“Silicon Valley Bank (UK) Ltd has today been sold to HSBC,” a statement from the Treasury said after urgent talks at the weekend.
“This transaction has been facilitated by the Bank of England, in consultation with the Treasury, using powers granted by the Banking Act 2009.” Chancellor of the Exchequer Jeremy Hunt added that no government cash was involved, while all customer deposits have been secured.
“This (agreement) ensures customer deposits are protected and can bank as normal without taxpayer support.
“I am pleased that we have reached a resolution in such a short time,” Hunt added.
HSBC has agreed to pay just £1 for the business, the banking giant added in a separate statement.
The Asia-focused lender added that SVB UK had loans of around £5.5bn and deposits of around £6.7bn.
HSBC China says it did not receive instructions from Chinese regulators to limit outbound remittances
“This acquisition makes excellent strategic sense for our business in the UK,” said HSBC chief executive Noel Quinn.
“It strengthens our commercial banking business and enhances our ability to serve innovative and fast-growing businesses, including in the technology and life-sciences sectors, in the UK and internationally.”
He added that SVB UK customers “can continue to bank as normal” and will be “safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC”.
California-based SVB failed after its clients, mainly from the technology sector, made massive withdrawals and after its latest attempt to raise new money proved unsuccessful.
Its demise is not only the biggest bank failure since Washington Mutual in 2008, but also the second largest retail bank failure in the US.