HSBC logo is seen on a branch bank in the financial district in New York

A run on the bank by its depositors led to the collapse of the Silicon Valley Bank (SVB) on Friday, March 10, 2023. Fortunately for customers located in the United Kingdom who were understandably worried about the sudden turn of events, SVB's U.K. subsidiary was promptly purchased by HSBC U.K.

According to BBC News, HSBC has acquired the U.K. arm of the collapsed U.S. Silicon Valley Bank (SVB). With the acquisition, U.K. tech firms that are SVB clients who were previously unable to withdraw their funds will now be able to access their money. The report added that the transaction does not involve taxpayer money.

The Bank of England and the government reportedly led the talks to finalise the deal as soon as possible. According to CNBC, HSBC U.K. has agreed to acquire SVB U.K. for £1 ($1.21). However, the assets and liabilities of SVB U.K.'s parent firm are excluded from the transaction.

"SVB U.K. customers can continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC," HSBC Group CEO Noel Quinn assured customers. He added that HSBC's acquisition "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 U.K. and internationally."

In a statement on Monday, HSBC said that as of Friday, March 10, 2023, SVB U.K. had loans of around £5.5 billion, deposits of around £6.7 billion, and £88 million of full-year profit before tax in 2022. SVB U.K.'s tangible equity is expected to be around £1.4 billion, but clarified that "final calculation of the gain arising from the acquisition will be provided in due course."

The U.K. Treasury, which facilitated the transaction alongside the Bank of England, said in a statement that the deal would protect the deposits of SVB U.K. clients.

Similarly, British Finance Minister Jeremy Hunt highlighted that the acquisition would ensure the protection of deposits and that customers can continue to bank as normal. "The U.K.'s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs," he said.

Andrew Griffith, economic secretary with the U.K. Treasury, expressed confidence that the fallout of SVB's U.K. branch won't be an issue. "The Bank of England governor has been very clear about the fact that this wasn't a systemic issue," Griffith said on Monday. "We've now resolved this bank, we've resolved that decisively, and it's now well capitalised with HSBC standing behind that, and customers will continue to have access to their deposits and their banking facilities, while still protecting the taxpayers' interests."

However, he emphasised the need to support the various businesses served by the bank. "It's an important sector to us, and in particular, they rely on their access to cash to do what they're exceptionally good at," he said. "So it was a clear priority for us to be able to give them the certainty this morning, if we could, that they could continue to operate their business."

SVB U.K. only serves over 3,000 business customers. However, the bank is focused on tech startups, a sector deemed by the government as pivotal to the UK's future economic success.

HSBC's acquisition caused a "big sigh of relief" for UK tech startups. "I think I speak on behalf of UK startups when we say this is a huge relief, and we can look our teams in the eye at 9 o'clock in our all-hands calls, which were going to be pretty nerve-racking this morning and say, not only will we be able to make the next payroll, but we can continue business as usual, continue innovating, doing our research and development and building the future of U.K. technology growth," said SVB U.K. customer Toby Mather, who is also the CEO and co-founder of startup children's education platform Lingumi.