The tech sector breathed a sigh of relief this morning after it was announced that Silicon Valley Bank UK (SVB UK) had been sold to HSBC for £1 in a deal facilitated by the Bank of England.
Silicon Valley Bank, which is headquartered in Santa Clara, California, was placed into receivership with the US Federal Deposit Insurance Corporation on Friday.
The British bank – completely unrelated to the US bank in terms of governance and balance sheet assets – was due to file for bankruptcy yesterday evening. With 40-50 per cent of UK tech startups banking with SVB UK, it’s starting to look as if a major disaster is about to strike in the Cambridge tech sector.
Then, this morning (March 13), the announcement came with the headline “Government and Bank of England Facilitate Sale of UK’s Silicon Valley Bank”.
The Treasury statement read: “Silicon Valley Bank (UK) Limited has been sold today to HSBC. Headquartered in London, HSBC is the largest bank in Europe and one of the largest banking and financial services organizations in the world, serving 39 million Worldwide customer SVB UK customers will be able to access their deposits and banking services as normal from today.
“The Bank of England facilitated this transaction, in consultation with the Treasury, using powers conferred under the Banking Act 2009. No taxpayer money was involved, and customer deposits were protected.
“Benefiting from post-crisis banking reforms, which introduced powers to safely manage bank failures, this sale has protected SVB UK clients and taxpayers.”
Consultant Jeremy Hunt said: “The UK tech sector is a truly global leader and of huge importance to the UK economy, supporting hundreds of thousands of jobs. I said yesterday we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that provides SVB UK clients trust “.
HSBC stated: “Today we have acquired Silicon Valley Bank UK for £1. SVB UK customers can continue banking as normal, knowing their deposits are backed by the strength, safety and security of HSBC.
“We are proud that we have been able to act quickly to support the dynamic and fast-growing UK technology sector and the important role it plays in the UK economy.”
In Cambridge, the news was a stay of execution.
Jason Milad, CEO and co-founder of healthcare accelerator Start Codon, told Healthcare.com Cambridge Independent“It has been great to see the entire sector and our supporters coming together with government and HSBC to protect innovators who are fighting for a better future. We must never take our privileged positions for granted, and we will work even harder to translate innovation into better clinical outcomes and positive societal impact.”
SVB UK had 3,500 clients, with loans of around £5.5 billion and deposits of around £6.7 billion. The crucial takeaway – that SVB UK customers can access their deposits and banking services as normal from today – has impressed Cambridge’s tech sector.
George Neville Jones, co-founder of Cambridge Future Tech, applauded the participation of the HSBC affiliate Cambridge team in the successful outcome.
“A hard cessation of SVB UK operations would have been a huge negative for the commercialization of innovation in the UK,” he said. HSBC’s acquisition of SVB UK sidesteps that entirely.
“The continued service to SVB UK clients is testament to the exceptional work that the UK government, banking industry and investment community did over the weekend.”
Neville Jones added: “HSBC Cambridge technology banker, Jimmy Bignall, has always been a positive force for our fast-growing companies. To even know HSBC’s role in the bailout. He just wanted to see his sector survive.”
“It is great to see such incredible leadership in a time of crisis,” said Sherry Cotto, Chair of SID and FTSE 100 NED on Linkedin. “So many people in the banking sector, the technology industry and the Treasury Department have come together to make this happen. They all deserve our thanks and admiration.”
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