Regulators are increasingly struggling to manage the crisis that has emerged following the collapse of Silicon Valley Bank (SVB) and Signature Bank. To this end, the American FED, the USDT and the FDIC announced that all deposits placed with SVB, including insured and uninsured ones, will be paid in full. On March 10, US federal banking supervisors took control of Silicon Valley Bank, one of the most important lenders to US technology and life science companies and startups.
On the other hand, in order to restore confidence in the banking sector, the British authorities concluded an agreement with HSBC UK Bank to take over the British subsidiary of Silicon Valley Bank. Under this HSBC buys SVB’s UK subsidiary for just £1. The transaction has already taken place and the financing will come from HSBC’s existing resources.
Crisis in the banking sector
On March 11, the Bank of England, the central bank of the United Kingdom, announced that Silicon Valley Bank UK would also become insolvent. The central bank said it approved the sale to stabilize SVB UK, ensure continuity of banking services, minimize disruption to the UK technology sector and strengthen confidence in the financial system.
The British government has been looking for a buyer for SVB’s British subsidiary for days to protect the country’s technology sector. British Chancellor of the Exchequer Jeremy Hunt said the government had moved quickly to deliver on its promise to look following the sector and the bank’s customers.
This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC
Deposits will be protected, with no taxpayer support
I said yesterday that we would look following our tech sector, and we have worked urgently to deliver that promise
— Jeremy Hunt (@Jeremy_Hunt) March 13, 2023
“The acquisition means that SVB UK can continue to operate as usual knowing that their deposits have the strength, security and protection of HSBC behind them.” – said Noel Quinn, CEO of HSBC.
SVB UK customers will be able to access their deposits and banking services as usual from today, and they are now safe, it has been reported.
However, many are concerned that the measures introduced by the authorities may not be adequate to deal with the crisis. They fear that, as it stands now, the beginning of a much bigger trust problem is unfolding in the entire banking sector, which might lead to further bank failures.
