Silicon Valley rushes to save Bank UK | – #Silicon #Valley #rushes #save #Bank

LONDON, March 13 (Reuters) – USAThe rapid bankruptcy of Silicon Valley Bank in , the nation’s largest since the financial crisis bank failure, first Britain caught his regulators off guard. But within hours on Thursday, it became clear that the window to save SVB’s English arm was tight.

Conversations with eight people involved in the discussions reveal the frantic nature of SVB UK’s final hours, with at least half a dozen bank looks at the creditor’s numbers.

On Monday, HSBC ( HSBA.L ), Europe’s biggest bank with a balance sheet of almost $3 trillion, announced it was buying SVB UK for less than the price of a cup of coffee. He spent 24 hours checking his books.

About 5.5 billion sterling assets and about 6.7 billion with sterling deposits, SVB UK is very weak compared to HSBC. But SVB’s potential failureflour Concerns that it could reverberate across the UK’s start-up industry resulted in a rushed deal sealed by deep pockets.

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“Whether or not the acquisition of HSBC is successful depends largely on credit will depend on the asset quality of its book, which cannot be assumed to be good given the early-stage nature of many borrowers,” said former Chief Operating Officer Jerry del Missier. Executive at Barclays and now Chief Investment Officer at Copper Street Capital.

At least one claimant is HSBC offer from the symbolic pound (1.21 USA dollars) offered a higher price, but HSBC was preferred because its size and resources meant it would be a more stable owner, according to the source.

After a run on deposits, the Bank of England began a scramble to save SVB UK, which was seeking bankruptcy if it failed to find a buyer.

That complicated the bailout because NatWest, which acted as SVB UK’s clearing bank in Britain, suspended operations, a source with knowledge of the matter said.

The situation was urgent because SVB UK had lost almost half of its deposits within 48 hours of its bailout, the source said.

The US Federal Deposit Insurance Corporation also closed access to the parent company’s technology platform, the source said, as potential suitors and treasury officials called both the FDIC and NatWest over the weekend to try to restart SVB UK.

The FDIC did not respond to a request for comment, while NatWest declined to comment.

As of Saturday afternoon, five sources with knowledge of the matter said officers SVB UK contacted potential bidders for a closer look, giving them access to secure online vaults containing lenders’ financial information.

As the crisis deepened, on Sunday morning the finance minister, Jeremy Hunt, the government of Silicon Valley Bank’s clients in Britain way he tried to convince that he was working on it.

Banks including Lloyds Banking Group ( LLOY.L ), NatWest Group ( NWG.L ), Bank of London and OakNorth have examined the books to see if a contingency deal can be reached, sources told Reuters.

The executive director of the bank told Reuters that at least one Britain bank of a US-owned lender offer was stopped by part of the loans given to the riskier start-up sector.

For another bank, 75% of its loan book to private equity and venture capital funds is considered high quality, which is an opportunity.

Still, Treasury officials have continued to work on a “Plan B” in case the sale fails, which could see Silicon Valley Bank UK collapse if a single buyer emerges, according to multiple sources involved in the talks.

30 MINUTES DEADLINE

British Prime Minister Rishi Sunak struggled with inadequate Wi-Fi to contact Bank of England Governor Andrew Bailey and Finance Minister Jeremy Hunt during the more than 15-hour flight to San Diego as talks continued. A source familiar with the matter said HSBC’s chief executive Noel Quinn and UK chief executive Ian Stuart began a closer look at SVB UK that afternoon.

Boutique investment bank Robey Warshaw – which previously advised HSBC in its defense against a break-up call by its biggest shareholder – was drafted in by the bank to help them with the SVB UK deal at the weekend. said the matter.

On Sunday evening, Treasury officials gave potential bidders a final 30 minutes to submit their proposals, one of the sources directly involved in one of the bids said.

Later, the board members of SVB UK together with the officials of the Bank of England and the Treasury entered into negotiations.

At the same time, regulators in the US have moved to protect SVB depositors, as well as taking broader measures to strengthen confidence in the banking system.

RISKS AND LEAKAGES

Quinn, HSBC’s chief executive, was attracted by his potential to attract about 3,000 high-growth technology and startup clients, a source familiar with his thinking told Reuters.

The purely nominal purchase price and the underlying health of SVB UK meant the deal also made financial sense, the source said.

Still, HSBC may struggle to accurately value and manage these loans because of their niche nature, said Xavier Van Hove, managing director of debt specialist Nighthawk Partners. A spokesperson for HSBC said that HSBC also paid SVB UK 2 billion plans to inject sterling liquidity.

The final preparations continued until Sunday night, because the contract was from the rules of British fencing free demanded to be done. Some of SVB UK’s business customers are outside the UK, while HSBC’s UK ring-fenced business is to some extent intended to handle UK-domiciled customers only.

Great Britain The spokesman of the Cabinet of Ministers made a comment to the Treasury Department. The Bank of England declined to comment. The advisory firm Rothschild, which is advising SVB UK, also declined to comment, sources said.

The reception and US measures did little to reassure investors on Monday that the worst was over.

Europe bank shares saw their biggest losses since the start of Russia’s aggression in Ukraine, with the STOXX index (.SX7P) of 600 lenders down nearly 6%.

(1 dollars = £0.8296)

Reporting by Lawrence White, Sinead Cruise, Amy-Jo Crowley, Stefania Spezzati, Iain Withers, Pablo Mayo Cerqueiro, Additional by Elizabeth Piper in San Diego report; Edited by Anna Driver

Our standards: Thomson Reuters Trust Principles.

2023-03-14 01:04:47
Source – reuters

Translation“24 HOURS”