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2023 Banking Crisis - Silicon Valley Bank's UK subsidiary sold to HSBC.

Geoff Riley

13th March 2023

The fall-out from the failure of Silicon Valley Bank (SVB) continues and this is a fast-changing story. Here are some of the emerging details of the deal brokered by the UK government for HSBC Holdings to act as a White Knight to buy Silicon Valley Bank UK with all deposits of many UK tech companies protected.

The Federal Reserve in the United States (their central bank) announced an emergency lending facility on to shore up the US banking system as another bank closed in the wake of Silicon Valley Bank's implosion. US bank, New York-based Signature – one of the main banks for the crypto industry – is being wound up.

Over the weekend, the UK government has been trying to find a buyer for Silicon Valley Bank UK and put together a back-up plan to support tech companies that have deposits trapped in the lender.

7am (Monday): HSBC Holdings is on the brink of a deal to rescue Silicon Valley Bank UK, averting the technology-focused lender's insolvency.

The FT has this background piece on the underlying causes of the bank failure. Please read: Silicon Valley Bank: the spectacular unravelling of the tech industry’s banker

Once again the role of financial regulators is being questions:

Please read: Regulators face questions over missed warning signs at Silicon Valley Bank

BBC News: UK firms await government help after US bank collapse

The Guardian has this background piece: Please read: Why Silicon Valley Bank was so important to UK tech sector Apparently up to £7 billion in deposits in SVB UK are potentially at risk - By one estimate, the bank served between a third and a half of the UK’s “innovation economy”.

BBC News: Please read: Silicon Valley Bank: Lessons learned from failed 'tech bank'

Bids pour in to buy British arm of Silicon Valley Bank

Is the collapse of Silicon Valley Bank a pre-cursor to another financial crisis? It would seem not, given the bank's purchase by HSBC Holdings this morning, but this article looks at why at a time of rising interest rates, there were already concerns about the ability of one or two banks to withstand the stresses that this implied.

Silicon Valley Bank: Rising interest rates will uncover more ticking bombs (BBC news)

Silicon Valley Bank collapse causing chaos for tech startups

What is a White Knight bidder?

A white knight bidder is a term used in business and finance to refer to a company or an individual that comes to the rescue of another company that is under threat of a hostile takeover. The white knight is typically a friendly suitor that offers a more favorable acquisition deal to the target company than the hostile bidder, with the aim of winning the approval of the target's management and shareholders.

In other words, a white knight bidder is a potential acquirer that is viewed as a savior by the target company, as opposed to a hostile bidder, who is seen as an aggressor. The term "white knight" is often used to describe a more desirable acquirer who is willing to pay a fair price and has the best interests of the target company at heart.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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