The collapse of SVB Bank sent aftershocks overseas, with concerns about a wider fallout from Silicon Valley Bank and the U.S. banking sector dominating news headlines across Europe and Asia.
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SVB Bank Collapse Fallout In Europe
Over the weekend, the Bank of England seized control of SVB UK after its collapse, which followed a bank run on its U.S. branch.
The failure threatened thousands of British tech companies and investors who rely on the startup focused SVB UK as their bank of choice, the U.K.’s Telegraph said.
Early Monday, HSBC UK agreed to buy the United Kingdom arm of Silicon Valley Bank for 1 pound sterling ($1.21) after all-night talks. HSBC will also take over the banking unit’s debt.
The strategic purchase will strengthen HSBC’s access to “innovative and fast-growing firms, including in the global technology and life-science sectors, in the U.K. and internationally,” CEO Noel Quinn said in an exchange filing.
Meanwhile, British Prime Minister Rishi Sunak said there was “no systemic contagion risk” following the SVB collapse. The Silicon Valley Bank fiasco will not trigger a new financial crisis, he added.
In Europe, Reuters reported the central bank convened its crisis team on Monday to assess the possible fallout on the local market, though no emergency action is foreseen.
The FTSE 100 fell 2.2% in Monday trading, with banks extending last week’s losses after the SVB collapse.
U.K. banks in the more domestically focused FTSE 250 fell 2.5%, after losing more than 6% last week.
HSBC shares dropped 3.5% after revealing it will acquire the UK subsidiary of SVB for £1.
European stocks in the Stoxx 600 index fell 2.5% Monday, led by a sharp decline for bank stocks.
Silicon Valley Bank Failure Rocks Asia
In China, the SVB collapse rocked the country’s tech startups and venture capital firms, the South China Morning Post reported.
Chinese biotech firm BeiGene said it had 3.9%, or about $175 million, of its $4.5 billion cash locked up in SVB. Other companies including Zai Lab, Sirnaomics, MobVista and Noah Holdings reported some exposure in the biggest U.S. bank failure since the 2008 financial crisis.
And after HSBC U.K. swooped in to buy SVB Bank’s U.K. arm, the bank’s China subsidiary may be taken over by its Chinese partner, Shanghai Pudong Development Bank, sources told SCMP.
On Monday, Asia-Pacific stocks traded mixed.
China’s Hang Seng Index and the Shanghai Composite rose nearly 2% and 1.2%, respectively. But Japan’s Nikkei 225 fell 1.1%.
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