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HSBC to Buy UK Arm of Silicon Valley Bank
- elAhmo 4y agoWasn't SVB UK fine and unaffected by events in US? In the sea of information about this, other than 'all is good', I didn't know UK branch was being taken over and sold as well.
- fredoralive 4y agoThe public messaging on Friday from SVB UK was that they were entirely ring-fenced, all is well etc. But behind the scenes they were going to the Bank of England asking for emergency funding. So by Saturday the wheels were turning on the insolvency processes. I guess the US media was focussed on the US side of things, in the UK there has been a lot of noise about lots of UK startups having money tied up in SVB UK and how things need to be done to sort the situation.
- rvnx 4y agoHSBC made a deal too good to be true, that it sounds like it may be hiding something. Nobody can buy a profitable, stable, multi-billion company for 1 GBP, without a good cause. Yes, SVB UK is legally fenced, but in terms of management and daily practices, why wouldn't they have the same issues as their parent ?
- shoo_pl 4y agoIt's not a multi-billion company, it a bank that has billions of loans and deposits (assets and liabilities). Yes, its a profitable bank but on order of magitude lower scale: > It also logged a pretax profit of £88 million ($106.5 million) in its last fiscal year ended December.
- Teandw 4y agoYou can't have a profitable bank that's insolvent. That doesn't make sense. The company has gone insolvent because it's no longer profitable.
- ClumsyPilot 4y agobanks are not 'normal' companies. Their Liabilities and assets outmatch their 'profit' by 100x. They could be making a handy profit yesterday and be bancrupt today because the market has moved. Normal companies can't go bancrupt in one day
- Teandw 4y agoI'm not sure you understand what's happening here or the basics of business and liquidation. "Normal companies can't go bankrupt in one day" - They didn't go bankrupt. They went into liquidation. Massively different thing. You can have a company with billions of quid saved up in the bank that goes into liquidation. Liquidation is quite common and happens daily in the UK to 'normal' companies. Companies that were profitable last week and no longer can operate as they're not profitable enough to pay their debts/what they owe. I think your issue here is you don't understand what liquidation is/means and basic principles of business profits. The most important part is that while a company may be profitable at the 'end of year' -- They have to first get to the end of the year.
- schrodinger 4y agoOff topic, but did the slang quid come from liquid as in assets?
- Teandw 4y agoNever thought about that. According to Mr Google; believed to come from the Latin phrase “quid pro quo,” which translates into "something for something," or an equal exchange for goods or services.
- mattmanser 4y ago
- mytailorisrich 4y agoIf HSBC bought it for £1 (which is a minimal amount in order to have a binding contract) it does not mean that the deal is too good to be true. It means that the company actually has a negative net value, i.e. more liabilities than assets, and of course HSBC will take those liabilities on. It's a bit like if you want to buy a house that has a mortgage and the deal is that to buy the house you have to take the mortgage on as well. How much cash would you be willing to pay for that? Potentially 0 (i.e. taking the mortgage on is enough for you).
- helsinkiandrew 4y agoYes but its parent/owning company had gone bust. Lehman Brothers UK arm was also solvent (I think they had roughly £8B of assets after everything was wound up and the administrators bills were paid) but had no cash after the parent company went bust.
- LatteLazy 4y agoWholly owned subsidiaries can have their assets swallowed up by their parent companies debts. So the bad debt can effectively "trickle down" as the assets are liquidated and passed up the structure. By forcing a sale now the BoE prevents American creditors from leapfrogging British ones...
- amriksohata 4y agoRelated, Hindenburg got trolled in India for not spotting this earlier on. https://www.indiatimes.com/worth/news/hindenburg-trolled-for-failing-to-detect-svb-crisis-in-home-country-595726.html https://www.indiatimes.com/worth/news/hindenburg-trolled-for...
- Slava_Propanei 4y ago[dead]
- dunno7456 4y agoWasn't HSBC accused of money laundering for cartel back in 2012?
- js4ever 4y agoHSBC itself is being sold to other banks, for Eg in Canada it's sold to RBC, in France it's sold to another local bank...
- arcticbull 4y agoNot all of it just a couple of their regional subsidiaries. They're the 8th largest bank in the world, just under BNP Paribas and Citigroup.
- karambahh 4y agoIt's sold to MyMoneyBank, formerly known as GE Moneybank... not exactly local :)
- robjan 4y agoHSBC is a British bank with most of the profits being made in Asia (specifically Hong Kong). They may be selling off their unprofitable subsidiaries but the UK operations are pretty stable.
- sofixa 4y ago> HSBC is a British bank with most of the profits being made in Asia (specifically Hong Kong) Funnily that's where their name comes from - Hongkong and Shanghai Banking Corporation Limited, HSBC for short (it's now the official name, HSBC does no longer stand for anything, probably to lessen the obvious imperialistic past in it's name).
- robjan 4y agoThe full name is still printed on most of our banknotes (alongside Bank of China and Standard Chartered who issue a smaller number of notes). I think it's just the parent company who deleted the original meaning.
- dan1234 4y agoIIRC, it stopped standing for anything when they moved the HQ to London in the 90s (following the takeover of Midland Bank), and it became HSBC Holdings plc.
- yieldcrv 4y ago> HSBC announced it had acquired the UK subsidiary of SVB for £1. What. Well, honestly, well done everybody. This was resolved over a weekend. And shows that it can be resolved.
- arcticbull 4y agoToo bad HSBC USA didn't take the US arm. HSBC have been exiting the US market for a while and more competition is always better.
- dmix 4y agoWe don't know who bought SVB yet it will likely be announced tomorrow (EST/PST timezone) probably. The US gov announcing the full confidence of deposits wasn't merely an altruistic move, they likely had a buyer at the time of announcement and maybe a secondary commitment to support the mortgage debt which caused the whole thing.
- TMWNN 4y agoYou may be right, but the news coverage I've seen implies that the full backstop of all deposits regardless of size was announced because there is no buyer for SVB. Basically, there just wasn't enough time for buyers to feel comfortable with pulling the trigger.
- dmix 4y agoAh that's very possible. It makes sense their main objective was calming the market given other banks failing, committing ahead of time to finding a long term holder to the $90B mortgage security (in addition to the large set of stable depositor assets they held) was probably a much safer bet than the other options, regardless if a buyer fully committed to either asset group.
- kasey_junk 4y agoI’d guess (and it’s purely a guess) that it was their loan portfolio that made assessing their balance sheet hard to price. MBS’ and long term bonds can be priced using very standard techniques. Loans secured with startup equity warrants on the other hand are tough.
- donw 4y agoI read this as "HSBC to Arm Silicon Valley Bank", which is an entirely different customer-management strategy.
- abofh 4y agoWe... would like you to leave your deposits here with us.
- salawat 4y agoIn the UK, the bobbies may not be packing, but the bankers sure are. Somehow, though, I could actually see that being a thing.
- fredoralive 4y agoWell, during grouse season there are probably going to be a fair few armed bankers about.
- cjrp 4y agoSeems like a great deal for HSBC? Presumably the competition regulator gives deals like this a free pass. > As at 10 March 2023, SVB UK had loans of around £5.5bn and deposits of around £6.7bn. For the financial year ending 31 December 2022, SVB UK recorded a profit before tax of £88m.
- mytailorisrich 4y agoIf the BoE took them over and HSBC bought them for £1 you can be sure that those numbers do not reflect the current situation.
- joosters 4y agoOddly, it had been reported that the bidding process for the bank was 'competitive' and that there were several interested parties. I can't see how that could have been true if the final price was a token £1 ?
- sebzim4500 4y agoMaybe other bidders weren't willing or able to guarantee all deposits?
- mytailorisrich 4y ago£1, plus all deposits, plus all other liabilities (from what I understand). Maybe the other bidders were not offering that much...
- fredoralive 4y agoPossibly the other bidders were seen as less robust and able to absorb the liabilities of SVB UK?
- Teandw 4y agoThe token £1 is just a payment requirement for ownership. The bidding process for insolvent companies is essentially who will take on the most "problems" for the best outcomes for the business. So one company may bid saying they want to acquire X parts of the company but can not take on the advertising arm or the quality assurance part of the company; which means jobs losses etc. Another company may say we'll acquire all of the company but not the freehold properties the business owns. The liquidation team then have to decide which bid offers the best likely outcome for the creditors/business. The £1 isn't technically what they're paying for the company, as they're taking on debt, leaseholds, pension funds etc. Their bid is technically tens or hundreds of millions depending on the situation.
- 55555 4y agoArticle isn’t super clear; is HSBC filling the gap?
- deleted 4y ago[deleted]
- LatteLazy 4y agoIf there is a gap in the UK SVB entity then YES. But they will not be doing anything for the rest of the corporation.
- al_be_back 4y agoSurprised Goldmans didn't buy them - and position it as Marcus for Startups.
- ulfw 4y agosorry I was misinformed
- toyg 4y agoBecause they do serve the UK, parent mentioned Marcus which is one of their UK consumer products. I don't know if they want to leave retail, but that's the sort of thing that can be different by region.
- joosters 4y agoThey're already losing enough money with Marcus right now, why risk losing some more? Goldman needs to figure out how to properly run their existing consumer bank first.
- rich_sasha 4y agoMarcus is meant to focus on proper retail, which is a very different business to this. Buying SVB doesn't really achieve what Goldman wants from Marcus.
- dan-robertson 4y agoAren’t Goldman thinking about winding down / selling off their retail stuff?
- kylehotchkiss 4y agoDoes that include the Apple Card?
- kriro 4y agoGreat play by HSBC. It's very interesting because some banks will make out very nicely in the comming weeks and some will be dragged down a lot by the general pull of the market. HSBC already found some "free money" right away. I think at least one of the big US banks will also print some money (I'd bet on JPM).
- bognition 4y agoWhat is “free money” and how does a big bank print money?
- short_sells_poo 4y agoThey acquired a bunch of client assets for 1 GBP. Those client assets will generate money for them in the long term. For HSBC this is a great deal. For the clients too, come to think of it. On Friday the future of their money was uncertain, whereas today they can relax a bit because a big bank is backing them.
- deleted 4y ago[deleted]
- Teandw 4y agoThey didn't acquire client assets for £1. That's not quite how it works.
- noobermin 4y agoAssuming of course clients don't fucking pull out the moment they can when svb uk reopens.
- naijaboiler 4y agoUm "client assets" are liabilities to a bank
- deleted 4y ago
- nprateem 4y agoThank god we've got a PM who's a grown up again.
- przemub 4y agoSupporting his father in law comes first.
- kdkwsndne 4y agoHow was he involved? How did he help this situation? The US also did it over the weekend. Kinda had to be done.
- wslh 4y agoI read ARM... cognitive effects.
- realworldperson 4y ago[dead]
- Am4TIfIsER0ppos 4y agoSo from one group of crooks to a larger group of crooks.
- 22SAS 4y agoHope they fire SVB UK's head of risk assessment. They definitely don't want total wokesters like her running things.
- MagicMoonlight 4y agoThey bought it for £1 and will make a billion from it. What a stupid deal
- communism 4y agoI think we should socialize the deposits of the depositors of the svb. viva communismo