HSBC UK, the ring-fenced subsidiary of HSBC, has acquired Silicon Valley Bank UK for £1 ($1.21), according to a latest filing.

In a statement from the Treasury, it said the Bank of England oversaw the transaction with consultation from the UK Treasury to safeguard the deposits of Silicon Valley Bank UK customers.

HSBC Says Surprise SVB UK Buyout ‘Makes Excellent Strategic Sense’ 

According to the filing, as of March 10, Silicon Valley Bank UK held loans totaling approximately $6.6 billion and deposits of roughly $8.1 billion.

“This acquisition makes excellent strategic sense for our business in the UK,” Noel Quinn, HSBC Group CEO, said.

“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.”

British Finance Minister Jeremy Hunt believes that the agreement guarantees the safety of customer deposits, allowing them to continue banking normally, without any financial assistance from taxpayers.

Race To Acquisition 

News of HSBC’s acquisition follows The Bank of London’s bid to supposedly save SVB UK.

Anthony Watson, Group Chief Executive and Founder of TBOL, has underlined the preservation of SVB’s services.

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

The Evening Standard also reported that the British government is interested in having Barclays acquire the failing bank’s England unit.

Reuters also reported that other UK banking institutions, including SoftBank-owned OakNorth Bank, were considering similar steps.

The Abu Dhabi Investment company ADQ was likewise interested in the SVB arm.

Washington Mutual Comparisons

The collapse of Silicon Valley Bank had investors compare it to the downfall of Washington Mutual in 2008.

It was one of the largest savings and loan associations in the United States and had significant implications for the U.S. economy and the global financial system during that year.

Washington Mutual’s failure was caused by the collapse of the U.S. housing market and the subprime mortgage crisis.

The bank had invested heavily in risky mortgage-backed securities and had extended loans to high-risk borrowers who were unable to repay their debts.

As a result of Washington Mutual’s collapse, the U.S. government had to step in and take control of the bank’s assets.

This bailout cost the Federal Deposit Insurance Corporation (FDIC) an estimated $2.2 billion, making it the largest bank failure in U.S. history at the time.

-Featured image from REUTERS/Brendan McDermid