Article isn’t super clear; is HSBC filling the gap?
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HSBC to Buy UK Arm of Silicon Valley Bank
31–40 of 156 posts
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#32> HSBC announced it had acquired the UK subsidiary of SVB for £1. What. Well, honestly, well done everybody. This was resolved over a weekend. And shows that it can be resolved.
Too bad HSBC USA didn't take the US arm. HSBC have been exiting the US market for a while and more competition is always better.
HSBC just restructured, I've been an HSBC US customer for 10 years including business banking, they're not going anywhere, just only serving high net worth and business now. I agree it would have been nice if they bought SVB, they'v been great for me with my startups, they're really good at business banking.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#33Seems like a great deal for HSBC? Presumably the competition regulator gives deals like this a free pass. > As at 10 March 2023, SVB UK had loans of around £5.5bn and deposits of around £6.7bn. For the financial year ending 31 December 2022, SVB UK recorded a profit before tax of £88m.
It's said that no bank (even the best-managed) can withstand a fullscale bank run. So to the extent that the US side of things created a crisis of confidence, that might have been enough to topple SVB UK, even if all of its fundamentals were OK.
> It's said that no bank (even the best-managed) can withstand a fullscale bank run
I keep reading this but this should not be true
Any bank will hit liquidity issues on a full-on bank run, as not 100% of a banks assets will be marketable, but central banks will provide emergency liquidity in these situations
But banks should not hit insolvency issues like SVB did
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#34Wasn't SVB UK fine and unaffected by events in US? In the sea of information about this, other than 'all is good', I didn't know UK branch was being taken over and sold as well.
The public messaging on Friday from SVB UK was that they were entirely ring-fenced, all is well etc. But behind the scenes they were going to the Bank of England asking for emergency funding. So by Saturday the wheels were turning on the insolvency processes. I guess the US media was focussed on the US side of things, in the UK there has been a lot of noise about lots of UK startups having money tied up in SVB UK and…
HSBC made a deal too good to be true, that it sounds like it may be hiding something.
Nobody can buy a profitable, stable, multi-billion company for 1 GBP, without a good cause.
Yes, SVB UK is legally fenced, but in terms of management and daily practices, why wouldn't they have the same issues as their parent ?
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#35Earlier quoted context omitted.
As anyone who has played Civ4 knows, everything is worth what its purchaser will pay for it. But yeah, they surely should have been able to find someone willing to pay 100-10000% more than that.
Buying for £1 is a common thing in the UK for companies in distress. In reality it’s worthless so should be £0 due to the mountain of worth and risk they need to wade through to realise the value, but UK contract law requires some kind of consideration (I think that’s the right term, my contract law for engineers module was a while ago now) for both sides otherwise it’s not a valid contract.
But all weekend SVB UK has been claiming that SVB UK has no issue and is totally safe.
So if sold for 1 GBP, it's literally a steal.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#36HSBC itself is being sold to other banks, for Eg in Canada it's sold to RBC, in France it's sold to another local bank...
HSBC is a British bank with most of the profits being made in Asia (specifically Hong Kong). They may be selling off their unprofitable subsidiaries but the UK operations are pretty stable.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#37Earlier quoted context omitted.
But how? Surely it was worth more than that?
Somebody at HSBC will be able to wine and dine off of this for the rest of their life.
They bought £5bn of assets and liabilities and bunch of admin work integrating it all. I highly doubt anyone is bothering to break out the champagne for this one - it is a rounding error at best.
This isn't 4d giga brain chess stuff, its adults walking into the room. A meaningless tiny bank with assets and liabilities broadly matched has gone under - the regulator has stepped in, phoned around the market and somebody had to take it. £1 is the best they could do - and I expect that it is going to, directly at least, be a loss of money for HSBC all the same.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#38I read this as "HSBC to Arm Silicon Valley Bank", which is an entirely different customer-management strategy.
In the UK, the bobbies may not be packing, but the bankers sure are.
Somehow, though, I could actually see that being a thing.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#39Earlier quoted context omitted.
The public messaging on Friday from SVB UK was that they were entirely ring-fenced, all is well etc. But behind the scenes they were going to the Bank of England asking for emergency funding. So by Saturday the wheels were turning on the insolvency processes. I guess the US media was focussed on the US side of things, in the UK there has been a lot of noise about lots of UK startups having money tied up in SVB UK and…
HSBC made a deal too good to be true, that it sounds like it may be hiding something. Nobody can buy a profitable, stable, multi-billion company for 1 GBP, without a good cause. Yes, SVB UK is legally fenced, but in terms of management and daily practices, why wouldn't they have the same issues as their parent ?
It's not a multi-billion company, it a bank that has billions of loans and deposits (assets and liabilities). Yes, its a profitable bank but on order of magitude lower scale:
> It also logged a pretax profit of £88 million ($106.5 million) in its last fiscal year ended December.
Re: HSBC to Buy UK Arm of Silicon Valley Bank
#40Great play by HSBC. It's very interesting because some banks will make out very nicely in the comming weeks and some will be dragged down a lot by the general pull of the market. HSBC already found some "free money" right away. I think at least one of the big US banks will also print some money (I'd bet on JPM).