HSBC Holdings – the largest banking institution in the United Kingdom – will reportedly purchase Silicon Valley Bank UK Limited (SVB UK) for £1 ($1.20).

Silicon Valley Bank made the headlines last week, revealing liquidity issues and balance sheet holes. This triggered huge panic among venture capital firms, who reportedly advised investors to withdraw their funds from the bank. After failing to raise the necessary capital to stay afloat, the financial regulators of California shut down SVB.

According to recent coverage , HSBC will acquire SVB’s UK unit for a little over a dollar. The latter had loans of approximately $6.7 billion and deposits of around $8.1 billion as of March 10, 2023.

SVB UK ended last year with a profit of $106 million (before tax), while its tangible equity is expected to be nearly $1.7 billion.

All assets and liabilities belonging to the parent companies of SVB UK are excluded from the deal with HSBC. Noel Quinn – CEO of Britain’s biggest bank – commented:

“This acquisition makes excellent strategic sense for our business in the UK. It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally.”

He explained that SVB UK clients will be subject to maximum protection and can continue to bank as usual after the agreement.

HSBC vowed to update shareholders on the acquisition when disclosing Q1 results at the beginning of May.

Unlike the turbulence in the USA, the Bank of England assured that the UK’s banking system was not harmed after the recent events:

“No other UK banks are directly, materially affected by these actions or by the resolution of SVB UK’s US parent bank. The wider UK banking system remains safe, sound, and well capitalized.”