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The collapse of the "Silicon Valley Bank" led to widespread panic in the global market, with investors and traders scrambling to sell off their assets. While the US government has already taken several measures to stabilize the banking system. The New York-based bank also financed many firms in the UK, to protect these companies UK Banking giant HSBC has acquired the British arm of SVB with the support of the Bank of England.
As of March 10, Silicon Valley Bank UK Limited had around £5.5 billion in loans and around £6.7 billion in deposits, HSBC said. "This acquisition makes excellent strategic sense for our UK business," HSBC Chief Executive Noel Quinn said.
"HSBC is Europe's largest bank and SVB UK customers should be reassured by the strength, security and protection they bring, this morning the Government and the Bank of England facilitated a private sale of Silicon Valley Bank UK to HSBC. Deposits will be protected, without taxpayer support”- Britain's finance minister, Jeremy Hunt said.
The Shocking Collapse of Silicon Valley Bank
Silicon Valley Bank (SVB) was one of the leading banks for the innovation economy, with over $100 billion in assets under management. The bank provided a range of financial services to its clients, including commercial banking, investment banking, and asset management. The bank was shut down by US regulators on Friday in what was the biggest failure by a US bank since 2008.
The collapse of the SVB Financial Group occurred after it had to force-sell its AFS securities at a 1.8 billion loss. Following the news, customers immediately tried to pull their money, including many venture-capital firms. According to the regulator, the withdrawals initiated by depositors and investors amounted to $42 billion on Thursday alone.
On Friday, Shares of SVB Financial Group Inc., the parent company of Silicon Valley Bank, dropped more than 60% before the trading was halted after the financial institution announced plans to sell $2.2 billion in stock.
“We are taking these actions because we expect continued higher interest rates, pressured public and private markets, and elevated cash burn levels from our clients,” Silicon Valley Bank Chief Executive Officer Greg Becker said.
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