HSBC Acquires UK Arm of Silicon Valley Bank for £1 to Save UK Tech Startups #
HSBC Holdings has acquired the UK arm of the Silicon Valley Bank (SVB) for £1 ($1.21 USD) to save UK tech startups from a potential collapse. The acquisition came after the California-based SVB could not meet withdrawal demands in the US, raising fears for the UK’s tech and life sciences industries.
The Bank of England released a statement on March 10 about its readiness to place SVB UK into a Bank Insolvency Procedure if there was no significant intervention. Tech companies in the UK, including Pinterest and Shopify, were affected as they struggled to make withdrawals for payroll. With HSBC stepping in, deposits are now secured and tech leaders and startup founders are expected to continue banking as usual.
SVB UK helped out with lending and savings for many tech firms in the UK. About 16 tech and life sciences companies in Europe disclosed over £156.10 million ($190 million USD) in exposure to SVB in the UK and the US. Trustpilot Group and Diaceutics were affected by the situation, and the latter was forced to suspend trading on AIM temporarily.
Around 210 firms and startups wrote an open letter to the UK Chancellor Jeremy Hunt at the Treasury Department, seeking financial assistance. The letter was signed by about 140 CEOs and founders of well-known brands, including Zoom Video Communications, GitHub, Stripe, DocuSign, Atlassian, Coursera, Slack Technologies, Eventbrite, Fitbit, GoPro, Twilio, Box, Asana, Cloudera, Dropbox, and SurveyMonkey — all of whom requested urgent action from the UK government. The UK startup space witnessed significant growth in tech investments last year, with £12.7 billion ($15.47 billion USD) tech investment, ranking the UK second for global startup funding, above China and India.
The government’s intervention facilitated HSBC’s takeover of SVB, restoring hope among tech investors in the country. In the US, the financial industry and tech sector are still struggling to recover fully from the SVB collapse, and emergency measures were recently announced to support banks and reassure depositors that their money is safe.