Deposits protected as HSBC acquires UK arm of Silicon Valley Bank

Britain’s finance minister Jeremy Hunt said the government and the Bank of England had facilitated a private sale of the UK arm of Silicon Valley Bank to HSBC, in a move which will protect deposits without taxpayer support.

“This ensures customer deposits are protected and can bank as normal, with no taxpayer support,” Mr Hunt said. “I am pleased we have reached a resolution in such short order.

“HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”

Across the Atlantic, US president Joe Biden has insisted that Americans can have confidence about the safety of their bank deposits after the collapse of one institution and the closure of another over the last couple of days.

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On Sunday evening US financial authorities announced measures to guarantee money held in accounts at Silicon Valley Bank (SVB) and Signature Bank.

Mr Biden said on Sunday night that he wanted to see those responsible for “this mess” held fully accountable.

“The American people and American businesses can have confidence that their bank deposits will be there when they need them”, he said.

“Over the weekend, and at my direction, the treasury secretary and my national economic council director worked diligently with the banking regulators to address problems at Silicon Valley Bank and Signature Bank.

“I am pleased that they reached a prompt solution that protects American workers and small businesses, and keeps our financial system safe. The solution also ensures that taxpayer dollars are not put at risk.

“I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”

Meanwhile, the Irish Government is monitoring the potential fallout from the collapse of SVB as US regulators moved to shore up the wider financial system with a series of extraordinary measures on Sunday night.

US authorities moved to assure all SVB depositors their money is safe and set up a new lending programme aimed at buttressing the wider financial system. The moves came two days after the lender collapsed into receivership in the biggest bank failure the United States in more than a decade.

The Federal Deposit Insurance Corporation (FDIC) began an auction for SVB’s assets over the weekend, and a winning bid could be announced before businesses open on Monday.

Here, the Department of Finance “is monitoring developments” and “engaging with the relevant authorities,” a spokesman said in response to questions. “While there is limited direct impact on the Irish financial system, Silicon Valley Bank was a lender to some Irish companies since 2012,” he said.

“The department will monitor the progress” of the sale process and “what impact that may have on domestic companies impacted by this failure,” he added.

[ Silicon Valley Bank shutdown sparks Irish start-up worries ]

SVB made a number of investments in the Irish start-up ecosystem since it began operating here in 2012. Among the Irish companies that have successfully done business with SVB in the past are Diaceutics, Accuris, Boxever, Clavis Insight, Profitero, Glofox, AMCS, and Intel-owned Movidius.

As of the end of February, the Irish Strategic Investment Fund had about $100 million (€94 million) invested in funds linked to SVB. A spokesman for ISIF said the investments were structured “in a manner that legally ringfences them” from the rest of SVB.

Irish software firm Intercom has about $22 million of deposits stuck in SVB, company chief executive Eoghan McCabe said in a tweet. The vast majority of it’s capital is not held at that bank, he added.

In the US, concern about the health of other smaller banks focused on the venture capital and start-up communities prompted regulators to take action. Treasury Secretary Janet Yellen approved the moves, which will enable the resolution of SVB “in a manner that fully protects all depositors,” the Treasury said Sunday in a joint statement with the Federal Reserve and FDIC on Sunday night.

SVB depositors “will have access to all of their money starting Monday, March 13,” the government said. The statement noted that US taxpayers won’t be responsible for any losses associated with SVB’s resolution.

The Federal Reserve said in a separate statement that it’s “prepared to address any liquidity pressures that may arise” and is creating a new “Bank Term Funding Program” that offers loans to depository institutions that pledge assets “valued at par.” – Additional reporting: Reuters/Bloomberg