The U.K. unit of Silicon Valley Bank has been sold for the symbolic sum of £1 following the financial institution’s closure by regulators.

The buyer is London-based bank HSBC plc, which announced the acquisition today. HSBC stated that “the transaction completes immediately.” The sale was brokered by the U.K. government and the Bank of England.

“This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC,” U.K. Chancellor Jeremy Hunt said in a statement.“Deposits will be protected, with no taxpayer support.”

Silicon Valley Bank was an important provider of financial services to the tech industry. According to the company’s website, its clients included about half of all venture-backed startups and life sciences companies in the U.S. It also worked with many tech investors. 

Last Wednesday, the bank disclosed that it had taken a $1.8 billion loss on a securities sale. It also reported lower-than-expected deposits for February. Shares of Silicon Valley Bank’s parent company, SVB Financial Group Inc., tanked the next day and customers rushed to withdraw their funds.

The development led regulators to close Silicon Valley Bank on Friday in a move that sent shockwaves through the tech industry. The closure impacted startups not only in the U.S. but also other countries where the bank maintained business operations, including the U.K.

Silicon Valley Bank launched its U.K. unit, SVB UK Ltd., in 2004 and over the years reportedly won the business of more than 3,500 local clients. Many of those clients were startups and life sciences companies. SVB UK managed £6.7 billion worth of deposits, HSBC disclosed today in the press release announcing its acquisition of the business.

HSBC is one of the world’s largest banks with more than $2.9 trillion in assets under management. The acquisition of SVB UK was carried out by HSBC’s U.K. subsidiary, which has 14 million customers throughout Britain. 

Following the collapse of Silicon Valley Bank on Friday, the Bank of England announced plans to place SVB UK into insolvency. That move could have reportedly created liquidity issues for local clients. SVB UK’s acquisition by HSBC averted the insolvency procedure. 

“SVB UK’s business will continue to be operated normally by SVB UK,” the Bank of England said in a statement. “All services will continue to operate as normal and customers should not notice any changes.”

Silicon Valley Bank is one of two major financial institutions that regulators have closed in recent days. On Sunday, New York state regulators shut down Signature Bank Corp., which had more than $100 billion in assets under management at the end of 2022. The latter company was a major provider of lending services to the cryptocurrency industry.

On Sunday, the U.S government announced plans to backstop uninsured deposits at Silicon Valley Bank and Signature Bank. The U.S. Department of Treasury stated that customers of the companies will receive full access to their deposits. Additionally, the Federal Reserve Board made additional funds available to help other banks process withdrawals.

Photo: Silicon Valley Bank