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Seems 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.
by cjrp 4y ago
Seems 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.
- dkjaudyeqooe 4y agoUsually the "buyer" is being paid to take it off the regulator's hands, so the actual price is negative. The token (positive) amount is to make it easier to deal with in a legal sense. Thus the bids are for the lowest subsidy instead of the highest price.
- deleted 4y ago[deleted]
- jalapenos 4y agoI imagine it was "which one of you wants this steaming mess?". HSBC: [sigh], ok fine why not The token is just to make the sale contract binding
- collectedparts 4y agoIt's said that no bank (even the best-managed) can withstand a fullscale bank run. So to the extent that the US side of things created a crisis of confidence, that might have been enough to topple SVB UK, even if all of its fundamentals were OK.
- shawabawa3 4y ago> It's said that no bank (even the best-managed) can withstand a fullscale bank run I keep reading this but this should not be true Any bank will hit liquidity issues on a full-on bank run, as not 100% of a banks assets will be marketable, but central banks will provide emergency liquidity in these situations But banks should not hit insolvency issues like SVB did
- deleted 4y ago[deleted]
- vatsalaggarwal 4y agoI think what made it worse here is that depositors of SVB were undiversified... If you had a bank that held deposits from various kinds of people, it's less likely that all of them would want their money out at the same time unless there was some of kind of widespread change in sentiment towards the overall financial system.
- helsinkiandrew 4y agoWhat made SVB even worse was that its customers were flush with VC cash and didn't need to borrow, so it looked elsewhere to make a return on the cash.
- HWR_14 4y agoThe line is a little blurry. You can be underwater in mark-to-market terms on a bond portfolio, but be fine if you guess the timeline for redemption and can hold them to maturity. Banks estimate what percentage of their assets will be held to maturity. So needing extra liquidity causes insolvency.