© Reuters
By Geoffrey Smith
Investing.com — HSBC (LON:) has agreed with the Bank of England to buy the U.K. operations of Silicon Valley Bank (NASDAQ:), whose collapse last week sent shudders through the U.S. financial system.
The Bank had taken control of SVBUK after its U.S. parent fell victim to a run by depositors after reports of heavy losses on its bond portfolio that wiped out a large part of its capital.
“The Bank and (His Majesty’s Treasury) can confirm that all depositors’ money with SVBUK is safe and secure as a result of this transaction,” the Bank said in a joint statement with the Treasury. “SVBUK’s business will continue to be operated normally by SVBUK. All services will continue to operate as normal and customers should not notice any changes.”
“No other U.K. banks are directly materially affected by these actions, or by the resolution of SVBUK’s U.S. parent bank,” the BoE said. “The wider U.K. banking system remains safe, sound, and well capitalized.”
SVB, with $212 billion in assets, was the second-biggest bank failure in U.S. history. Over the weekend, the U.S. Treasury, Federal Reserve, and Federal Deposit Insurance Corporation had put together a bailout package that essentially protected all of Silicon Valley Bank’s depositors, including those with assets above the federally-guaranteed $250,000 limit.
The authorities had also taken the decision to close Signature Bank (NASDAQ:), another lender that had suffered a run on its deposits, and to make emergency lending available to other ‘eligible’ lenders that might suffer similar pressure on their deposit bases.
In contrast to the U.S. action, the resolution of SVB U.K. will not need underwriting by taxpayers.
