The U.K.’s BioIndustry Association has praised the government for securing a buyer for the U.K. subsidiary of the failed Silicon Valley Bank.
It follows the collapse of SVB UK’s U.S.-based parent on Friday, which sent shock waves across the biotech industry and spurred a panic among top venture capital firms. On Sunday, the U.S. Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation announced that they would “fully protect all depositors” of SVB.
With the bank’s U.K. subsidiary in similar trouble, the U.K. government and the Bank of England worked to find a buyer over the weekend, with multinational banking firm HSBC ultimately acquiring SVB UK for the symbolic price of just 1 pound sterling.
U.K. Chancellor of the Exchequer Jeremy Hunt confirmed in a tweet this morning that all deposits will be protected without requiring any taxpayer support. “I said yesterday that we would look after our tech sector, and we have worked urgently to deliver that promise,” Hunt said.
BioIndustry Association CEO Steve Bates described the deal as “a win for U.K. life sciences and a win for U.K. banking.”
“The UK life science sector wants to thank and congratulate the U.K. government, the Bank of England and HSBC for listening and moving at pace to find a great solution to the SVB UK issue,” Bates said in a statement this morning.
Through the deal, HSBC has “acquired some great new growing life science customers and kept the doors of some of the U.K.’s fastest-growing life science companies open,” the trade body said.
The announcement of the sale capped off a tense weekend for European biotechs that relied on SVB UK. Netherlands-based Pharming declared this morning that thanks to HSBC’s move, the precision-medicine-focused biotech “expects to have access to the $19 million it has on deposit at SVB UK, and to not bear any losses on these deposits.”
At the time it went under, SVB UK had a total balance sheet size of around 8.8 billion pounds, with a deposit base of around 6.7 billion pounds, according to the Bank of England. Despite these resources, the “scale of the deterioration of liquidity and confidence” meant that the bank considered that SVB UK’s “position was not recoverable.”
After consulting national regulators, the Bank of England decided to use powers granted to stabilize banks in the wake of the 2008 financial crisis to ride to SVB UK’s rescue.
“All depositors’ money with SVB UK is safe and secure as a result of this transaction,” the Bank of England said in a statement on Monday morning. All services will “continue to operate as normal and customers should not notice any changes,” the bank added.
From HSBC’s perspective, the acquisition “makes excellent strategic sense for our business in the U.K.,” HSBC Group CEO Noel Quinn said in a statement. “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 U.K. and internationally.”