HSBC has bought the UK arm of collapsed US lender Silicon Valley Bank, thereby rescuing hundreds of British tech startups. After hours of intensive talks, the Chancellor of the Exchequer,

Jeremy Hunt, announced the move before markets opened. Hunt insisted that all deposits had been protected and that customers will be able to access their deposits and banking services as normal. The transaction was facilitated by the Bank of England in consultation with the Treasury, using powers introduced after the 2008 Credit Crunch. The crisis erupted when the California-based parent company Silicon Valley Bank imploded and had its assets seized by US regulators. The Bank of England then ordered the UK subsidiary of Silicon Valley Bank into insolvency. This left more than 200 small British tech firms facing potentially catastrophic cashflow problems, with an estimated £2.5 billion of capital in Silicon Valley Bank. HSBC is believed to have bought the UK arm for a nominal sum, taking on its liabilities.

The Chancellor of the Exchequer, Jeremy Hunt, stated that the UK's tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs. He said that the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK, which ensures customer deposits are protected and that they can bank as normal, with no taxpayer support. He added that HSBC is Europe's largest bank, and that Silicon Valley Bank UK customers should feel reassured by the strength, safety, and security that brings them.

In a statement, the Bank of England said that the decision was taken to stabilise Silicon Valley Bank UK, ensuring the continuity of banking services, minimising disruption to the UK technology sector, and supporting confidence in the financial system. The Bank and HM Treasury confirmed that all depositors' money with Silicon Valley Bank UK is safe and secure as a result of this transaction. Silicon Valley Bank UK's business will continue to be operated normally by Silicon Valley Bank UK, and all services will continue to operate as normal.

JP Morgan had also been among the parties exploring buying the bank's British operations. Oaknorth Bank, a business lender founded by former Tory donor Rishi Khosla, had also been in takeover talks. There was also interest from The Bank of London and Abu Dhabi state-backed investment vehicle ADQ, according to Sky News. HSBC chief executive Noel Quinn said: "This acquisition makes excellent strategic sense for our business in the UK."

The Coalition for a Digital Economy (Coadec), a non-profit campaigning for policies to support digital start-ups, had previously warned that a collapse of Silicon Valley Bank UK could have had a significant impact on the UK's tech sector. A survey of 31 venture capital funds, which hold thousands of investments in UK tech and science firms, found that 34% of their portfolio companies (336) had accounts with Silicon Valley Bank UK. More than 200 of those had faced short or long-term cashflow risk. Around £2.5 billion of capital from these firms is locked in the lender. Photo by Coolcaesar, Wikimedia commons.