HSBC has told tech investors it will pump £2billion of liquidity into Silicon Valley Bank’s UK unit, in a show of reassurance after snapping up the division for just £1.
Bosses at the banking giant sought to further soothe start-up heads on a call yesterday, after it snagged the firm following all-night crunch talks.
HSBC chief executive officer Noel Quinn and its UK boss Ian Stuart, promised they would make sure operations ran smoothly at the UK arm of the collapsed US bank.
Rescue: HSBC chief exec Noel Quinn (pictured) and UK boss Ian Stuart, promised they would make sure operations ran smoothly at the UK arm of SVB
On the call, venture capital firms were told the purchase made strategic sense for HSBC, while Quinn told the BBC yesterday that it was ‘too good an opportunity to miss’.
And start-up founders described feeling heavily reassured and hugely relieved after a stressful weekend watching SVB crumble across the Atlantic.
Customers of the bank have now been able to access their accounts and withdraw money after the Government and the Bank of England led emergency talks.
The takeover did not involve any taxpayer money and will be funded from existing resources, HSBC’s UK-based ring-fenced subsidiary said in a statement yesterday.
HSBC is confident the rescue deal will help boost its presence within the technology and life-sciences industries.
At the same time founders and bosses at science, education and space start-ups said they were back to ‘business as usual’ – ending a frantic four days.
Those with money tied up in SVB UK were left scrambling on Thursday and Friday to withdraw as much cash as possible to stay afloat.
Some were able to take out enough money to remain in business for months, while others were unable and would have collapsed ‘almost immediately’.
Sebastian Weidt, chief executive of Universal Quantum, which is building the next generation of computers, said the last 72 hours were ‘quite a roller coaster’.
He said: ‘The UK was really at risk of losing the tech sector which is the future of the economy. If this deal was not struck it would have been a disaster.’
Benedikt von Thungen, founder of diagnostics business Sanome, which works with the NHS, said he let out a ‘huge sigh of relief’ when the sale was announced.
On Thursday he took three months worth of cash out of the bank to keep Sanome running, before unsuccessfully trying to withdraw the rest of his money on Friday – when SVB collapsed.
The 37-year-old said the intervention protected firms from going bust immediately.
Russ Shaw, founder of Tech London Advocates, said HSBC’s purchase avoided the UK’s tech ecosystem being ‘decimated’.
However, it is still not clear whether SVB UK would be managed as a standalone division or kept under the same brand.
HSBC said the arm had loans of around £5.5billion and deposits of some £6billion to £7billion as of March 10.
Danni Hewson, AJ Bell head of financial analysis, said that ‘time really will tell the story’ amid the volatile environment.
