The collapse of the UK arm of Silicon Valley Bank as well as that of its US parent company are to be investigated by authorities.
The collapse of SVB in the US on Friday had led to fears that its UK arm, operated as a separate business, would also close.
They were realised as it entered insolvency on Sunday, with Chancellor Jeremy Hunt warning that the situation put the UK tech sector at “serious risk” in an interview with Sky.
Several institutions put their name forward for a potential acquisition as the government scrambled to protect the UK tech sector from what was described as a potential ‘extinction-level event’. HSBC then announced on Monday morning that it had agreed a deal to take over SVB UK.
SVB UK, which recorded a profit before tax of £88 million last year, has loans of around £5.5 billion and deposits of around £6.7bn. All firms who banked with SVB UK are now able to access their funds.
Financial markets, hit by the turmoil on Monday, recovered half of their value on Tuesday.
In the US, the Department of Justice and stock market regulator the Securities and Exchange Commission are separately investigating the collapse of the California lender, as reported by the Wall Street Journal.
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A group of SVB shareholders have sued parent company SVB Financial Group and two of its top executives – CEO Greg Becker and CFO Daniel Beck – for allegedly concealing how rising interest rates would leave it susceptible to a bank run.
Regulators are also set to look at stock sales by Becker and Beck less than two weeks before the collapse: Becker exercised options on 12,451 shares at a cost of $105.18 and immediately sold them at prices ranging from $285.27 to $289.05, according to the SEC, while on the same day Beck sold 2,000 shares at $287.59.
Meanwhile in the UK, politicians on the Treasury select committee have written to the governor of the Bank of England and the economic secretary of the Treasury regarding SVB UK’s collapse.
They want to know details of how SVB UK was supervised; how HSBC was chosen in the rescue process; details of how HSBC has committed to support the tech industry as part of the deal; and how the episode reflects the regulation of banks since the financial crisis.
Back in the US, KPMG boss Paul Knopp has defended its audits of Silicon Valley Bank and Signature Bank, both of which collapsed within days of publishing annual reports certified by the accounting firm.