Silicon Valley Bank: US bank shares tumble despite Biden insists system is safe; HSBC rescues SVB UK – business live

As feared, regional bank shares are sliding too in New York.

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San Francisco’s First Republic has plunged by 66% at the open, PacWest Bancorp of Los Angeles has fallen 46%, and Western Alliance Bancorporation of Phoenix, Arizona are down 76%.

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San Francisco's First Republic shares lost 65% on Monday acWest Bancorp dropped 42%, and Western Alliance Bancorp lost more than 70% as regional bank stocks fell sharply. Zions Bancorporation shed 39%, while KeyCorp fell 23%. Bank of America lost 6%, Charles Schwab tumbled 18%.

— Red Hot Chilean Prepper (@JohnDou69102108) March 13, 2023

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The key question today, argues Neil Wilson of Markets.com is whether regulators have intervened to prevent contagion efficiently to make the banking sector stronger, or simply kicked the can down the road again.

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He suggests the mood in the market is closer to Apocalypse Now than It’s A Wonderful Life, writing:

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When George Bailey dipped into his honeymoon funds to help get depositors through the weekend without closing the Building and Loan company, he probably wished he had today’s incarnation of the FDIC, Federal Reserve and US Treasury backing him. US regulators’ actions may have saved SVB depositors and thousands of businesses, but the unintended consequences will be enormous.

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Was it a bailout? Yes and no. Shareholders won’t be made whole, depositors will. In practice, it is of course a bailout – when we discuss bailing out a bank we are not talking about the share price (investors) but the deposits (customers) – preventing a run that mean depositors have to take cents on the dollar. One thing is certain – there will be much debate about whether US regulators should have done what they did. And another thing we can say for certain is this – whatever way you cook it, the ingredients for the failure of SVB and wider fretting about the banking sector is down to having very long period of artificially low borrowing costs followed by a very sharp increase in the cost of money. Kool Aid is a hard habit to kick.

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Moral hazard? There will be all kinds of unanticipated consequences – or unintended perhaps; we can anticipate that things might happen even we don’t intend them to do so.

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Shares in US banks are tumbling at the start of trading in New York, despite Joe Biden’s insistance that the system is strong.

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Bank of America have dropped by over 7%, JPMorgan Chase & Co have dipped 2%, and financial services company Charles Schwab has plunged by 19%.

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This is Wall Street’s first chance to react the support package announced yesterday after the collapse of Silicon Valley Bank.

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$schw are you ok? pic.twitter.com/dqMX8nayld

— Andrey Nousi, CFA (@AndreyNousi) March 13, 2023

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The bottom line, Joe Biden insists as he discusses the Silicon Valley Bank collapse, is that:

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Americans can rest assured that our banking system is safe.

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Your deposits are safe.

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We will not stop at this, we will do whatever is needed, the president adds.

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President Biden declares that policymakers must reduct the risks of these banking collapses happening again.

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He explains that the Obama-Biden administration (in which he was vice-president) put in place “tough new requirements” on banks such as Silicon Valley Bank and Signature Bank.

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That included the Dodd-Frank law to make sure that the crisis we saw in 2008 would not happen again, Biden explains:

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Unfortunately, the last administration rolled back some of those requirements.

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I’m going to ask Congress and the banking regulators to strengthen the rules of the banks to make it less likely that this kind of bank failure would happen again.

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That would protect American jobs and small businesses, he adds.

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Biden then declares firmly:

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The management of these banks will be fired

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If a bank (such as SVB or Signature) is taken over by the FDIC, the people running the bank should not be working there any more, he explains.

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US president Joe Biden is speaking about the Silicon Valley Bank crisis now.

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Biden says the rescue package announced by US authorities last night – which guaranteed all deposits — means that SVB’s customers will be able to pay their workers and pay their bills.

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“Their hard-working employees can breathe easier as well,” Biden smiles.

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Biden says that Treasury secretary Yellen and a team of banking regulators have taken immediate action – the Federal Deposit Insurance Corporation took control of Silicon Valley Bank on Friday evening, and then Signature Bank on Sunday.

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Biden says:

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All customers with deposits at these bank can rest assured, they’ll be protected and they’ll have access to their money as of today.

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That includes small businesses who need to make payroll payments this week (a key worry for many customers), the president explains.

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And he states firmly, twice, that “No losses will be born by taxpayers”.

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Instead, the money will come from the fees that banks pay into America’s deposit insurance fund.

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A quick catch-up of the key points so far today.

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• The UK arm of collapsed US lender Silicon Valley Bank has been bought by HSBC after a weekend of negotations involving the Government and Bank of England.

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• HSBC is paying a symbolic £1 for SVB UK, after the tech-focused bank’s US parent company collapsed last week.

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I always wonder with these deals whether the last thing at the signing involves some lawyer saying "and now we will just need that pound" and all the bankers have to go through their pockets saying "I'm mainly contactless these days"

— Dan Davies (@dsquareddigest) March 13, 2023

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Announcing the deal, Noel Quinn, HSBC Group CEO said his bank would help SVB UK customers “grow in the UK and around the world.”

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The Bank of England and HM Treasury confirmed that all depositors’ money with SVBUK is safe and secure as a result of this transaction.

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Chancellor Jeremy Hunt said it was important to find a rescue deal for SVB UK that didn’t involve taxayer funds.

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We were faced with a situation where we could have seen some of our most important companies, our most strategic companies, wiped out and that would have been extremely dangerous.”

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• Speaking before the announcement, prime minister Rishi Sunak insisted “our overall financial system is sound and there’s nothing to worry about there”.

  Sunak was in close contact with Hunt during his 14-hour flight to the US yesterday where the PM will hold talks with Joe Biden and Australia’s prime minister Anthony Albanese.

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• Dozens of companies listed in London updated shareholders on their exposure to the collapse of Silicon Valley Bank and its UK branch.

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• But there has been more losses in the financial markets, with Europe’s main indices falling around 2%.

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• Investor have dumped bank stocks around the world. In London, Standard Chartered is down 6% with Barclays losing 5%.

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British banking stocks have taken a hit.#SVBCollapse pic.twitter.com/OikLlyETnQ

— Mike Cosgrove (@mikecosgrove) March 13, 2023

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• In Switzerland, Credit Suisse fell 10% to a record low.

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• Some US regional banks are heading for hefty falls when Wall Street opens in an hour, with First Republic Bank currently down 64% in pre-market trading.

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• Investors are also tearing up their forecasts for further interest rate rises, concluding that central banks will be less keen to tighten monetary policy harder. SVB’s collapse last week came after it made a loss on bonds it had bought, before prices were pushed down by higher borrowing costs.

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Back in Europe, shares in Credit Suisse have dropped to a new low.

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Credit Suisse shares tumbled over 12%, and were trading below 2.20 Swiss francs at one state this morning, down from Friday’s low of 2.41 francs.

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The cost of insuring Credit Suisse’s bonds against default has jumped this morning too.

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*CREDIT SUISSE GROUP DEFAULT SWAPS HIT RECORD AMID SVB FALLOUT

Shares down a further 10% to record low pic.twitter.com/aAjeRgqVCP

— IG (@IGcom) March 13, 2023

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Victoria Scholar, head of investment at interactive investor, explains:

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Despite HSBC’s rescue deal, investors are taking a cautious stance towards the banking sector compounded by the fact that this could slow the pace of central bank rate hikes, creating a headwind for banks’ net interest margins.

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The head of the Eurogroup, the gathering of eurozone finance ministers, has said the collapse of Silicon Valley Bank was a reminder that risk and moments of change can happen very unexpectedly.

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Eurogroup President Paschal Donohoe also told Bloomberg Television in an interview this morning that the euro area’s exposure to the fallout from the collapse of SVB is very limited.

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Donohoe insisted, ahead of a Eurogroup meeting in Brussels today, that:

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“We’ve a very strong regulatory and resolution framework here in Europe.

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“But of course any banking development such as this does prompt questions, and of course we’ll discuss this today in the Eurogroup.”

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The euro area’s exposure to the fallout from the collapse of Silicon Valley Bank is very limited, Eurogroup President Paschal Donohoe says https://t.co/FKluv2s7Rt

— Bloomberg Asia (@BloombergAsia) March 13, 2023

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Shares in another US lender, First Republic Bank, have more than halved in pre-market trading.

“,”elementId”:”f107718a-9e81-4c64-81a9-ddfa37a10da9″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

That’s despite its efforts to try to quell concern about its liquidity after the failure of Silicon Valley Bank.

“,”elementId”:”d5756014-04a5-42b9-8353-1adc5fecd700″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

First Republic said in a statement late on Sunday that it had more than $70bn in unused liquidity to fund operations from agreements that included the Federal Reserve and JPMorgan Chase & Co.

“,”elementId”:”a2e6ec8a-ed8c-483f-b5d0-46238277953a”,”_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

Today, we announced a further strengthening and diversification of our liquidity position. This increase in available liquidity further reinforces the safety and stability of First Republic. We are grateful to our clients for their continued support. https://t.co/eucaVOEjoy

— First Republic (@firstrepublic) March 13, 2023

n”,”url”:”https://twitter.com/firstrepublic/status/1635081436607954944″,”id”:”1635081436607954944″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”fbc1ac26-51d4-46b4-a283-185530800bb4″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

It said:

“,”elementId”:”998c4ba0-4488-454e-b00e-591c75f8d02d”,”_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

“The additional borrowing capacity from the Federal Reserve, continued access to funding through the Federal Home Loan Bank, and ability to access additional financing through JPMorgan Chase & Co. increases, diversifies, and further strengthens First Republic’s existing liquidity profile.

n

“,”elementId”:”00d9a3d6-8786-43b4-bcea-89b9cf6ee307″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

However, its shares are down almost 60% in pre-market trading at $34.50, having dropped 15% on Friday to $81.76.

“,”elementId”:”b4a4aef2-8724-4dc9-93d0-4e6b0760441d”,”_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

First Republic slumps more than 60% in US premarket trading as measures taken by US authorities to calm investor concerns failed to provide relief to the regional lender’s shares. (BBG) pic.twitter.com/c8zU1gucEd

— Jimplas-Capital Management (@JimplasE) March 13, 2023

n”,”url”:”https://twitter.com/JimplasE/status/1635206350157524993″,”id”:”1635206350157524993″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”276efb91-36c4-4ba1-bbe6-55764331bbc0″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

“It’s down to a sharp loss of shareholder confidence,” says Susannah Streeter at Hargreaves Lansdown to Reuters, adding:

“,”elementId”:”8d1c9411-3e57-4f04-bad9-f5d37fd7046e”,”_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

The banks aren’t being bailed out, but depositors are, and worries about the viability of First Republic are growing… It’s highly likely that there has been a rush of more depositors withdrawing money.

n

“,”elementId”:”742865b7-2e13-47d4-a9b0-cd5bed11f5c6″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explains:

“,”elementId”:”a0dced3d-69c0-425c-9891-5818138f7479″,”_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

SVB’s flash crash raised questions that other similar local banks in the US could also experience liquidity issues and may not be able to pay their depositors back, unless they also start selling their probably loss-making portfolios.

n

So, the likes of First Republic Bank, PacWest Bancorp and Signature Bank [which was closed by regulators last night] suffered heavy losses on Friday.

n

Across Europe, big banks pulled indices down on Friday, as well – even though they are not expected to have similar liquidity issues as the Silicon Valley Bank. Most big banks have a diversified client base and more importantly don’t have the same exposure to tech startups, which are extremely rate sensitive.

n

The contagion risk remains for small banks with highly rate-sensitive clients, but the US authorities now step in to avoid contagion. They said that SVB depositors could access their money today.

n

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European stock markets have made a very weak start to the new week, as the turmoil which began last week continues to grip the markets.

“,”elementId”:”77d1daf1-4851-4b6c-ac64-675da76f4e5c”,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

That’s despite US regulators protecting Silicon Valley Bank deposits and trying to shore up the financial system last night.

“,”elementId”:”6aa6d9f8-83de-4122-b1b9-2ad53659b1eb”,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

AJ Bell investment director Russ Mould says:

“,”elementId”:”8288b876-ebee-42ce-acfc-7d15b39b5c3d”,”_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

“Despite the best efforts of governments and regulators, the market was still very edgy on Monday as investors considered the fallout from SVB’s collapse.”

n

“,”elementId”:”cb668a39-708b-4cc5-8192-e054708ee555″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The FTSE 100 index has tumbled by 153 points, or 2%, to 7595 points. That’s its lowest level since the first week of January, and around 6% below last month’s record highs.

“,”elementId”:”aa58e8c8-81f9-4c1e-a57c-6b4104d9771e”,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Financial stocks are among the fallers in London, with Standard Chartered dropping 5%, investment manager Abrdn off 4.3%, and Barclays losing around 4.5%.

“,”elementId”:”51f17c2b-f982-4f32-8568-d8d72c7e5870″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Europe’s STOXX bank index has dropped by 5%, having shed 3.78% on Friday, leaving it on track for its biggest two-day fall since Russia began its invasion of Ukraine in February 2022.

“,”elementId”:”0035e674-312d-4e31-996a-f825ecd7b45d”,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Mould explains:

“,”elementId”:”85527d5d-57d3-4af9-92ba-0ca2a648bd95″,”_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

“There’s plenty to worry about whether it be the conflict in Ukraine, inflation, rising interest rates and now a potential banking crisis has been added to the mix. Little surprise people are feeling a bit spooked.

n

“For now, the panic which set in late last week appears to have been contained but whether the market can regain the confidence which saw the FTSE 100 hit a record high earlier this year remains to be seen.

n

“The funding environment for technology and start-up companies is certainly looking a lot less healthy and focus may start to turn to the asset managers and private equity funds which are invested in these firms.”

n

“,”elementId”:”fb1f1ff8-54a7-49fd-81c8-23a861d17bc3″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Across Europe, Germany’s DAX share index has lost 2.9% while Italy’s FTSE MIB has slumped by4.7%.

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Central banks may be less willing to raise interest rates higher, following the crisis at Silicon Valley Bank.

“,”elementId”:”e8e4a248-5f3c-4654-ac75-143031ad6559″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Policymakers could now be warier of breaking something else in the financial system, by tightening monetary policy much further.

“,”elementId”:”634d0134-48de-4dfc-8040-77cc7ef54f0f”,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

That’s because the steep increases in borrowing costs over the last year or so have pushed up the yield (or effective interest rate) on government bonds and mortgate-backed securities, which lowers their price.

“,”elementId”:”7e34da63-7de8-4a14-bbed-3b4f58d3ce4e”,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

That lead to SVB suffering a $1.8bn loss when it sold its $21bn package of securities last week, following an increase in customer withdrawals.

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Investors have cut their expectations for future interest rate rises on both side of the Atlantic.

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For example, another quarter-point rate rise by the Bank of England this month to 4.25% is only seen as a 66% chance this morning, from an almost certainty last week. Rates are no longer expected to rise above 4.5% this year.

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Expectations of future interest rate rises in the US have also been dampened, having jumped last week after hawkish talk by Federal Reserve chair Jerome Powell.

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Lee Hardman, senior currency analyst at MUFG Bank, explains:

“,”elementId”:”251036ab-7421-49a3-88bf-2b095ada6773″,”_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

The Silicon Valley Bank crisis has taken the wind out the US dollar’s sails by highlighting risks associated with rising rates.

n

The run on deposits forced SVB to realize losses on their securities portfolios that triggered a further loss of confidence in bank. It has made market participants more aware again that the Fed will eventually break something if it keeps raising rates.

n

“,”elementId”:”a064374a-abc4-4b13-a7d9-a2a30469a785″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The pound has gained over half a cent against the US dollar this morning, to $1.21.

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If you’re just tuning in….the UK government has struck a last-minute deal for HSBC to buy Silicon Valley Bank’s UK operations.

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The move, announced at 7am, will save thousands of British tech startups and investors from big losses after the biggest bank failure since 2008, my colleague Kalyeena Makortoff writes.

“,”elementId”:”12c63cab-8a4d-4049-99a5-3ac1145698ae”,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The takeover will override the Bank of England’s initial decision to place SVB UK into insolvency, after a run on the lender that was originally sparked by fears over the a multibillion-pound shortfall on the US parent company’s balance sheet.

“,”elementId”:”15e0b31e-f0a1-4245-9ba9-47c639adc61a”,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The US bank was closed and its assets seized by authorities on Friday.

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The acquisition – which only cost HSBC £1 – followed overnight talks between Downing Street, the Bank of England and HSBC bosses including the chief executive, Noel Quinn, as authorities rushed to protect the finances of SVB UK’s 3,500 customers.

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Those customers included venture capital investors and hundreds of tech startups that feared they would go bust if their deposits were wiped out.

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Here’s the full story:

“,”elementId”:”66b14aac-13a5-44e1-8e95-3aee8e8939fa”,”_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/mar/13/hsbc-buy-silicon-valley-banks-uk-tech-startups”,”text”:”HSBC to buy Silicon Valley Bank UK for £1 in government rescue deal”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”d99ccfb1-af8c-462d-9892-f72a0c5dfb13″],”attributes”:”pinned”:false,”keyEvent”:true,”summary”:false,”blockCreatedOn”:1678694983000,”blockCreatedOnDisplay”:”04.09 EDT”,”blockLastUpdated”:1678695372000,”blockLastUpdatedDisplay”:”04.16 EDT”,”blockFirstPublished”:1678695372000,”blockFirstPublishedDisplay”:”04.16 EDT”,”blockFirstPublishedDisplayNoTimezone”:”04.16″,”title”:”Full story: HSBC to buy Silicon Valley Bank UK for £1 in government rescue deal”,”contributors”:[“name”:”Kalyeena Makortoff”,”imageUrl”:”https://i.guim.co.uk/img/uploads/2022/02/22/Kalyeena_Makortoff.jpg?width=300&quality=85&auto=format&fit=max&s=594121cb34e62f02f354ff85ece52151″,”largeImageUrl”:”https://i.guim.co.uk/img/uploads/2022/02/22/Kalyeena_Makortoff,_L.png?width=300&quality=85&auto=format&fit=max&s=c22ec0845321415da97518e6e74376e1″],”primaryDateLine”:”Mon 13 Mar 2023 10.27 EDT”,”secondaryDateLine”:”First published on Mon 13 Mar 2023 02.32 EDT”,”id”:”640eda5f8f08fe006b95f9a7″,”elements”:[“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Chancellor Jeremy Hunt has said the rescue of Silicon Valley Bank’s UK arm by HSBC this morning was necessary to help protect some of Britain’s most important technology companies.

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Speaking to reporters, he says (via Reuters):

“,”elementId”:”12548990-8d91-43c6-9582-d9dc42baa20a”,”_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

“We were faced with a situation where we could have seen some of our most important companies, our most strategic companies, wiped out and that would have been extremely dangerous.”

n

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Asked about HSBC’s role, Hunt said the Treasury had been neutral as to what the solution for SVB’s UK arm was, and that his priority was to avoid using British taxpayer money.

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n

“We were looking at all options and we needed to be sure that if the sale didn’t happen, we had other solutions ready.

n

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Hunt also repeated reassurances that the situation with SVB’s UK arm did not pose any risk for Britain’s financial system.

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n

“The UK banking system is extremely secure, it’s well capitalised.”

n

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Eileen Burbidge, a partner at the tech venture capital firm Passion Capital, says the deal with HSBC is a ‘wonderful solution’.

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Burbidge tells Radio 4’s Today programme:

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n

It brings to the close a really chaotic weekend.

n

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Burbidge says the collapse of Silicon Valley Bank was “extremely consequential for the tech sector”

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n

The risk is thinking that the tech sector is its own isolated or niche ecosystem, when in fact now technology underpins all the UK economy and is involved in everything from transport to food supply, to healthcare…and everything we rely on for our daily lives.

n

The news that deposits are going to be guaranteed, and that banking services have been restored as of today, is obviously incredibly welcome.

n

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Q: But what about the moral hazard question? Won’t the sector be encouraged to do risky things because they think they’ll always be bailed out?

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Burbidge says not. She argues that neither SBV UK nor the UK tech sector were doing anything particularly risky before regulators took action last Friday.

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SVB UK was held to the same standards as every other bank in the UK, she insists, and this morning’s sale to HSBC shows that the bank had a strong asset base.

“,”elementId”:”47902704-35c3-46bc-bad4-400fcbb09b43″,”_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

What we had was a classic run on the bank, and actually the biggest run on a bank in history, depending on how you define it, based on how quickly funds were moved out of that bank between Thursday and Friday.

n

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[Reminder, that bank run began when parent company SVB Financial Group announced it had made a $1.8bn loss on the sale of $21bn of securities from its portfolio, meaning it would sell $2.25bn of new shares to shore up its finances.]

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The sale to HSBC this morning has been taken to “stabilise SVBUK”, says the Bank of England.

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The UK central bank says the deal will ensure the continuity of banking services, minimise disruption to the UK technology sector and support confidence in the financial system.

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Importantly, the Bank of England and HM Treasury can confirm that all depositors’ money with SVBUK is safe and secure as a result of this transaction.

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That will be a massive relief for tech companies, who feared an ‘existential threat’ to their businesses if they had lost their funds at SVB UK.

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The BoE add that the deal with HSBC means SVB UK will not now be put into insolvency. It says:

“,”elementId”:”48cbeb65-4127-4daa-b63a-2371d5c96de3″,”_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

SVBUK’s business will continue to be operated normally by SVBUK. All services will continue to operate as normal and customers should not notice any changes.

Customers can continue to contact SVBUK through the usual channels and borrowers should make any loan repayments to SVBUK as normal. SVBUK staff remain employed by SVBUK, and SVBUK continues to be a PRA/FCA authorised bank.

Today’s announcement supersedes the Bank’s 10 March statement that, absent any meaningful further information, it intended to apply to the Court to place SVBUK into a Bank Insolvency Procedure. Given the emergence of a credible purchaser for SVBUK the Bank has determined that using its resolution powers for stabilising failing banks is appropriate.

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

n

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Chancellor Jeremy Hunt says customer deposits at Silicon Valley Bank UK will be “protected, with no taxpayer support” through the rescue deal with HSBC.

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Hunt adds:

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n

I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise.

n

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This morning, the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC

Deposits will be protected, with no taxpayer support

I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise

— Jeremy Hunt (@Jeremy_Hunt) March 13, 2023

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Noel Quinn, HSBC Group CEO, is welcoming Silicon Valley Bank UK customers.

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He says they can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC.

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Quinn explains:

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n

“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.

n

We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world. SVB UK customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC. We warmly welcome SVB UK colleagues to HSBC, we are excited to start working with them.”

n

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Newsflash: HSBC UK Bank plc is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1, after a weekend of frantic negotiations by UK officials.

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In a statment to the City, HSBC says the transaction “completes immediately”. The acquisition will be funded from existing resources.

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The bank adds:

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n

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. SVB UK’s tangible equity is expected to be around £1.4bn. Final calculation of the gain arising from the acquisition will be provided in due course.

n

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Important developments.

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Sky News are reporting that HSBC Holdings is on brink of a deal to rescue Silicon Valley Bank UK, which would avert its insolvency.

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Exclusive: HSBC Holdings is on the brink of a deal to rescue Silicon Valley Bank UK, averting the technology-focused lender's insolvency. An announcement from the company and the Treasury is imminent. More soon.

— Mark Kleinman (@MarkKleinmanSky) March 13, 2023

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Rishi Sunak sought to reassure British businesses over the collapse of Silicon Valley Bank on Sunday night, our political correspondent Aubrey Allegretti reports.

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As he flew to the US for defence talks with President Joe Biden and Australian Prime Minister Anthony Albanese, the UK PM said “our overall financial system is sound and there’s nothing to worry about there”.

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He hinted an announcement was imminent, saying “we will have something to say very shortly”.

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Soon after landing in San Diego, the prime minister told broadcasters he had been monitoring the situation during the 15-hour flight, speaking to the chancellor and keeping in touch with regulators including the Bank of England.

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Rishi Sunak says he’s been working through the 15-hour plane journey to San Diego, speaking with the chancellor and Bank of England to “find the best solution” to SVB collapse.

He says people should be reassured our financial system is sound and there’s nothing to worry about.

— Aubrey Allegretti (@breeallegretti) March 13, 2023

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Sunak stressed he understood “the concern that people have got around what’s going on with SVB”.

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He added he was focused on “finding the best solution” that would “continue to support our world-beating technology sector and all the high-skilled jobs that it supports”.

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British ministers and the Bank of England are racing to conclude a private sale of Silicon Valley Bank’s UK arm before markets open his morning, after frantic all-night talks.

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People briefed on the negotiations said the potential acquirer was holding conference calls with the BoE through the night, the Financial Times reports.

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“The deal’s not done but we’re hoping for a market open announcement,” one person said.

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A sale of the stricken bank is the preferred choice of Jeremy Hunt, UK chancellor, since it would hopefully avoid the government having to make a big intervention to protect depositors.

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More here: UK races to finalise sale of Silicon Valley Bank unit before markets open

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US financial regulators rolled out emergency measures Sunday night to stem potential contagion from the collapse of Silicon Valley Bank, my colleague Ed Helmore reports.

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The measures include ensuring that depositors with the failed bank would have access to all their money on Monday morning.

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Regulators announced the measure in a joint statement from the treasury secretary, Janet Yellen, the Federal Reserve chair, Jerome Powell, and the Federal Deposit Insurance Corporation (FDIC) chair, Martin Gruenberg.

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They said in a statement:

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n

“Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,”

n

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The announcement came as Signature Bank was closed on Sunday by regulators. Depositors in Signature would also be made whole, the statement said.

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Capital Economics analyst Paul Ashworth said:

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“Rationally, this should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age.

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But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”

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More here:

“,”elementId”:”0046203a-db4f-4075-a8b8-4d24a266d7ca”,”_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/mar/12/silicon-valley-bank-collapse-no-bailout-janet-yellen”,”text”:”US guarantees all deposits after Silicon Valley Bank collapse, as Biden promises action”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”a3751afa-4f1c-41ca-b46c-d3e4517951ff”],”attributes”:”pinned”:false,”keyEvent”:true,”summary”:false,”blockCreatedOn”:1678689172000,”blockCreatedOnDisplay”:”02.32 EDT”,”blockLastUpdated”:1678689272000,”blockLastUpdatedDisplay”:”02.34 EDT”,”blockFirstPublished”:1678689272000,”blockFirstPublishedDisplay”:”02.34 EDT”,”blockFirstPublishedDisplayNoTimezone”:”02.34″,”title”:”Full story: US guarantees all deposits after Silicon Valley Bank collapse”,”contributors”:[],”primaryDateLine”:”Mon 13 Mar 2023 10.27 EDT”,”secondaryDateLine”:”First published on Mon 13 Mar 2023 02.32 EDT”,”id”:”640eb9b78f088ed9e3367d1e”,”elements”:[“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Good morning.

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British tech firms with money in the UK arm of Silicon Valley Bank are anxiously waiting whether a rescue deal will be agreed today to protect them, after SVB collapsed late last week.

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The Treasury and the Bank of England have been working through the weekend, amid warning that the UK’s technology sector could suffer significant damage unless a package was agreed fast.

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Dozens of early-stage tech companies in the UK warned the government that the sector faced “an existential threat”, given so many start-ups banked with SVB UK.

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Chancellor Jeremy Hunt has been focused on finding ways to keep cash flowing to tech groups. On Sunday morning, Hunt told Sky News that the collapse of SVB did not pose a systemic risk to the financial system.

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But, he waned that fledgling businesses across the tech and life sciences sector were at “serious risk” if deposits were wiped out by the collapse of SVB UK, saying:

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…there is a serious risk to our technology and life sciences sectors.

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“It happens to look after the money of some of our most promising and exciting businesses.

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Last night, one offer was announced for the UK branch of SVB. A consortium of investors led by The Bank of London, a UK clearing bank, has submitted a formal bid to the Treasury.

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Anthony Watson, group chief executive and Founder of The Bank of London said:

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“Silicon Valley Bank cannot be allowed to fail given the vital community it serves.

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This is a unique opportunity to ensure the UK has a more diversified banking sector, whilst allowing continuity of service to SVB’s UK client base. It would be deeply disappointing for this moment to lead to further consolidation of power among big banks.”

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“,”elementId”:”4ddb62af-3989-4af8-87cc-833be8437b04″,”_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”url”:”https://www.theguardian.com/business/2023/mar/12/uk-working-on-cash-lifeline-for-tech-firms-hit-by-silicon-valley-bank-collapse”,”text”:”UK racing to secure deal to protect firms from Silicon Valley Bank collapse”,”prefix”:”Related: “,”role”:”thumbnail”,”elementId”:”547b54be-06d5-4d1c-a8df-245c1610d5d3″,”_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

US regulators took action last night to shore up confidence in America’s banking system, after the collapse of Silicon Valley Bank – which was shut down by US regulators on Friday in the largest failure of a US bank since 2008.

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The Federal Reserve and the US Treasury announced that US Silicon Valley Bank depositors would get full access to their money today, effectively ripping up the limit on how much money was protected if a bank failed.

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Policyakers also announced the closure of another US bank, New York-based Signature, and also unveiled new emergency funding measures to help banks meet their depositors’ needs.

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The US move raises concerns over ‘moral hazard’. But billionaire hedge fund manager Bill Ackman welcomed the intervention, warning that without it “we would have had a 1930s bank run continuing first thing Monday”.

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This was not a bailout. During the GFC, the gov’t injected taxpayer money in the form of preferred stock into banks. Bondholders were protected and shareholders were diluted to varying degrees. Taxpayer money was put at great risk. Many people who screwed up suffered minimal to… https://t.co/mjwcnVRV9X

— Bill Ackman (@BillAckman) March 13, 2023

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The agenda

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• 9.30am GMT: Changes to UK inflation basket of goods and services

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• 2pm GMT: Eurozone finance ministers hold Eurogroup meeting

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Key events