HSBC came to the rescue of the UK Silicon Valley Bank in a deal that was crucial to the entire banking sector. But if you had told its CEO – just a few days ago – that this was going to happen, he wouldn’t have believed you.
“I’m going to work as usual on Friday. If someone told me [that] we’re going to buy another bank within two or three days, I can’t believe it,” Ian Stuart, CEO of HSBC Bank UK, told CNBC.European Squawk Box” Thursday.
All very fast. Silicon Valley Bank – a US lender with clients primarily in the tech and healthcare start-up worlds – has been deemed insolvent by US regulators at Friday. That has set off alarm bells throughout the pond, where SVB has a subsidiary.
Therefore, the Bank of England announced on Friday that, “without any meaningful additional information”, it would place Silicon Valley Bank UK in insolvency proceedings.
“Waked up on Saturday morning, saw the announcement and just after 10:30am we contacted the regulator to offer help, myself and our Global CEO Noel Quinn And it was kind of quiet, I think at the time, we were just trying to provide whatever help we could,” Stuart said.
More than 200 companies — those who deposit money with SVB UK — wrote on Saturday to the UK Department of Finance asking for help. They say some people will not be able to comply with pay deadlines without access to their deposit with SVB UK.
“We have access to the data bank early on Sunday. We have about five hours for due diligence and come around 6 p.m. on Sunday — and we have a lot of meetings during the day — as far as we know. I’m afraid it’s a competitive situation, and I can honestly say that even around 10 or 11 o’clock at night, I still thought it was a competitive situation and around that time we had a conversation. very closely with the regulator.”
Other financial institutions also participated and assessed the possibility of buying SVB UK, including OakNorth Bank, The Bank of London and Abu Dhabi investment firm Royal Group.
That is a great opportunity.
“It wasn’t until … the early hours of Monday morning that we thought, ‘yeah, I think we have a bank,’ and we started preparing to communicate at that point,” Stuart said.
HSBC UK announced at 7am London time on Monday that they bought the UK Silicon Valley Bank for £1 ($1.21). The deal protects £6.7 billion of deposits.
“We have a bank in the UK that’s running well, the staff are nice, the products are good and yes, five hours isn’t a lot of time for due diligence, but what we decided was,’ Are there any black holes? No, not that we can see,'” Stuart said.
“Is it worth – your words, not mine – a gamble. We think it is a reasonable approach, we are not asking for government support, we are not asking for anything. nothing out of the ordinary,” he said, adding that the deal would help HSBC accelerate its strategic planning in two or three years.
“It’s a great opportunity,” he said.
