English HSBC Acquires SVB UK Branch... Purchase Price 1,600 Won

British bank HSBC announced on the 13th (local time) that it will acquire the UK branch of Silicon Valley Bank (SVB), which closed due to a bank run, for 1 pound (about 1,600 won). Amid growing concerns in the global financial market caused by the SVB crisis, the UK has at least managed to put out the immediate fire.

[Image source=Reuters Yonhap News]

Noel Quinn, CEO of HSBC, explained, "This acquisition has very strategic significance for our UK business."

All deposits at SVB UK are fully protected. This acquisition announcement came after US financial authorities announced the launch of a 'new fund (BTFP)' program to fully protect SVB deposits and provide liquidity to the banking sector. Like other major governments, the UK, where SVB operated, has been reviewing measures to minimize damage to domestic companies from a chain of bank failures and startup bankruptcies.

The Bank of England (BoE) emphasized, "There are no banks that are directly and materially affected by this (HSBC's acquisition of SVB)," adding, "The broader UK financial system is safe, sound, and well-capitalized."

As of the 10th of this month, SVB UK's loans were recorded at 5.5 billion pounds, and deposits at 6.7 billion pounds. Tier 1 capital is expected to be 1.4 billion pounds.

SVB, based in Silicon Valley, USA, was caught in a bank run as tech companies, facing increased funding costs due to the Federal Reserve's rate hikes, began withdrawing deposits rapidly. The bank tried to put out the fire by selling existing assets such as US Treasury bonds, but due to high-intensity tightening, bond prices fell, resulting in an $1.8 billion loss. Immediately after announcing the asset write-down, depositors rushed to withdraw large amounts of cash, leading US authorities to decide on SVB's closure, ending its history after about 40 years since its establishment in 1982.