Silicon Valley Bank: ‘Resuming normal operations’ after HSBC rescue swoop – Live
HSBC’s move to snap up the stricken UK arm of Silicon Valley Bank has been hailed a “relief” for the UK’s tech firms today after nerves spread of contagion across sector over the weekend.
Ministers and tech industry figures had been scrambling to secure a deal for the UK business of the collapsed US bank over the weekend, with fintech lenders Oaknorth and the Bank of London making formal bids to buy the UK division of the bank.
The move by HSBC was welcomed by political and industry figures this morning who said it would help ease fears of contagion across the country’s banking and technology sectors today.
Chancellor Jeremy Hunt said the government had “worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.”
“Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support,” Hunt said in a statement.
“I am pleased we have reached a resolution in such short order. HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”
15:44 – US bank stocks continue falling despite Biden’s intervention
US banking stocks continued to fall on Monday despite Joe Biden’s pledge that “your deposits will be there when you need them.”
Wall Street giants performed poorly with Bank of America down 2.3 per cent, Wells Fargo down 4.4 per cent, and Citi down 5.2 per cent.
Regional lenders at greater risk of direct contagion from Silicon Valley Bank suffered even more. First Republic Bank fell 60 per cent, Western Alliance Bancorp 48 per cent and PacWest Bancorp 21 per cent.
‘’Joe Biden’s words of reassurance did little to calm markets as worries raced around that other smaller US banks could become the latest dominos to fall,” Hargreaves Lansdown’s Susannah Streeter commented.
“Despite the pretty bold regulatory action investors have still been shaken by the events of the past few days and are highly nervous about spilling over and creating pools of fresh problems.”
15:00 – President Biden wades into Silicon Valley Bank’s US collapse
President Joe Biden vowed stiffer bank regulation in the US today after regulators were forced to step in with a series of emergency measures to steady the ship following the collapse of Silicon Valley Bank and Signature Bank.
“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” Biden said.
“I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure will happen again, and to protect American jobs as a small business,” he added.
14:00 – SVB collapse would have been ‘much worse than people think’
Regulators at the Bank of England looked to quell fears of contagion on Friday and said the bank “has a limited presence in the UK and no critical functions supporting the financial system.”
However, chief of Coadec, Dom Hallas, who was at the heart of the rescue efforts over the weekend, said the crisis would have been “much much worse than people think”.
“There was a real risk of underselling how bad this could have been,” he said on a Twitter rooms session today.
“This could have been much worse than just businesses with ‘no vowels in the name’. There are a lot of different sectors that dock into this ecosystem,” he added.
12:09 – ‘Still no access’ to funds
Despite SVB UK’s assurances that it will be back up and running with normal operations today, a tech boss and SVB UK customer tells City A.M. that they are still unable to access any funding on the platform.
The UK bank warned in a statement today that customers could expect to face delays getting back into their accounts over the coming days.
11:50 – Banking stocks tumble despite SVB UK rescue
The FTSE 100’s five major banking stocks were all down this morning following HSBC’s dramatic acquisition of SVB UK for just £1.
Barclays was down 4.3 per cent, HSBC 3.6 per cent, Lloyds 4.0 per cent, NatWest 3.6 per cent and Standard Chartered 5.2 per cent.
While many figures have praised the work of the Bank of England and the Treasury in securing HSBC’s deal, markets remained skittish.
Hargreaves Lansdown’s Susannah Streeter commented “although US regulatory action, and the purchase of SVB UK, has averted a wider sell off investors have still been shaken by the event of the past few days, and are waiting with bated breath to see if repercussions in the financial sector will spill over and create pools of fresh problems.”
11:31 – War room
A tech boss tells City A.M that a number of start-up bodies had encouraged members to hit the Treasury with a deluge of emails laying out their case for the rescue of SVB UK over the weekend.
The onslaught of emails came after City minister Andrew Griffith convened an emergency roundtable with tech figures on Saturday afternoon over the weekend to get to grips with the crisis.
Dom Hallas, head of think tank the Coalition for a Digital Economy; Charlotte Crosswell, chief of the Centre for Finance, Innovation and Technology; Saul Klein co-founder of VC firm LocalGlobe and Gerard Grech, boss of start-up quango Tech Nation are understood to have headed the private sector efforts.
11:02 – SVB UK breaks its silence
The bank said its UK arm would “resume normal operations” today after the dramatic rescue from collapse by HSBC this morning.
10:11 – Good outcome but risks ahead?
Portfolio manager at Blackrock Rupert Harrison said the deal was a “very good outcome” and praised US regulators for acting “forcefully to prevent contagion” in the US.
However, looking forward Harrison suggested it was “hard to escape the conclusion though that treatment of uninsured depositors remains unfinished business from the regulatory reforms of the last decade…”
10:04 – Centre for Innovation, Finance and Technology welcomes move
Centre for Finance, Innovation and Technology (CIFT) welcomes the news that SVB UK has been sold and its depositors protected.
CIFT is a private sector-led body focused on driving forward financial innovation in the UK by bringing together experts from across finance and technology.
10:04 – Centre for Innovation, Finance and Technology welcomes move
Chair of the Treasury Select committee Harriet Baldwin praised HSBC’s takeover as the “best possible outcome in these challenging circumstances”.
“Thanks to everyone who worked round the clock to achieve it. Hope to have the chance to ask questions in @UKParliament later,” she continued.
9:28 – Tech Nation chief welcomes HSBC move
The boss of tech quango Tech Nation, which is due to be wound down this month after the government pulled its funding, welcomed the move in a statement on twitter.
9:05 – Nerves settle
HSBC’s move was welcomed by the labour party this morning, with shadow Chancellor Rachel Reeves saying it would come as a “relief” to country’s tech sector.
“That SVB has a buyer will be a relief to the entrepreneurs and the thousands of people working in the tech and start-up sectors, who woke up facing huge uncertainty this morning,” she wrote on twitter.
“Tech and life sciences are vital to getting our economy growing again.”
9:00 am – Hit back
Fintech clearing bank the Bank of London, which had made a formal bid to buy SVB UK, welcomed the “speedy solution” but hit out at the fact HSBC had been the winning bidder, saying it would shift power back into the hands of the UK’s traditional lenders.
“For many, this will be seen as a missed opportunity to support competition and innovation,” the firm said in a statement.
“It cannot be right that once again the heritage banks that have provided a poor service to UK entrepreneurs over many years benefit from their already dominant position.
“Britain needs better. For our part, we at The Bank of London stand ready to serve the entrepreneurial community of the UK.”