HSBC to buy SVB UK for £1 | Hacker News Reader

HSBC to buy SVB UK for £1

theguardian.com

68 points4ndrewl27 comments

Dupe BBC: https://news.ycombinator.com/item?id=35132181

Did this require negotiation with SVB HQ leadership or the FDIC or are these national subsidiaries wholly independent and can do this on their own (i.e. is there a CEO of SVB UK and a board that has these rights?)

I think the relevant issue is that the national regulators are independent. SVBUK was (is!) regulated by the UK FCA, so on insolvency the FCA is the regulator in charge of resolving issues.

There doesn't have to be a CEO but there will be a UK legal entity, subject to UK regulation (presumably the PRA) and with its own board.

Ok I think I get it now. The UK regulator seized the bank and the accounts and sold both to HSBC. The US regulator just seized the accounts, which have now been backstopped fully, and the SVB bank itself is just operating for a while longer as they find a buyer for the carcass?

No SVB has been shut down too. SVB UK is an independent company as of fairly recently. Banks have different regulatory environments than normal companies and no control if things go wrong.

SVB still has employees that are apparently going to continue to get paid for a number of weeks (years for the ktlo people probably). The creation of a separate entity for all the assets makes me think that they've separated the two and that SVB itself isn't shut down just yet (although clearly it's a carcass as I said before with a value near zero).

> BoE used special resolution powers to “Transfer to a Private Sector Purchaser”ie “without need for consent of the failed bank, or its shareholders, customers or counterparties”…

> ALSO…Forcing UK arm to subsidiarise with separate assets in August (when it reached £100m insured deposits) essentially frozen in UK by authorities and then able to be handed to HSBC (ie avoiding parent company/ Fed swiping them back to US) seems impressive UK regulatory success

https://twitter.com/faisalislam/status/1635184963414024195

The UK mandates that a bank serving UK depositors must do so through a ring-fenced entity. Explanatory link here: https://uk.practicallaw.thomsonreuters.com/w-008-0211?transi...

Relevant quote: “UK banks with GBP25 billion or more in "core deposits" are required to ring-fence their retail and small and medium sized enterprise deposit-taking business into a legally, operationally and economically separate ring-fenced body (RFB). An RFB is prohibited from certain activities such as dealing in complex derivatives, principal and commodity trading activities and operating branches and subsidiaries outside the UK and the EEA.”

SVB-UK is RFB setup by SVB in the US as a (presumably wholly-owned) subsidiary of the parent company. The Companies House entry for them is here:

https://find-and-update.company-information.service.gov.uk/c...

NB. I don’t think SVB-UK had £25billion in deposits? Reporting says high single digit £billions. It looks like the BoE forced them to create a UK subsidiary anyway if they wanted to keep their UK banking licence.

Can someone explain who pockets this £1, or how this is formally transferred? Is it at all transferred or is the price just for bookkeeping?

Doesn't really matter. Whoever gets it will probably drop it and lose it at some point when he buys a soda or empties his pockets for the washing machine

Goodness, they should be careful or someone else might buy a 200 billion dollar disaster with that same coin.

it gets converted into a snickers bar and ceos publicly split it in half and eat it.

Hah, if it's split then they essentially bought it for 50 cents.

I dont think you can even get a snickers for an euro. The fed took care of that.

I believe it will be acting as the "consideration" that UK contract law requires for a contact to be deemed valid.

The Bank of England apparently took over that subsidiary, so if the money is actually paid, it will be paid to them.

It's called a peppercorn: https://en.wikipedia.org/wiki/Peppercorn_(law)

If I am not mistaken, the £1 would typically be distributed between all of SVB UK's current shareholders. If SVB UK is 100% owned by the SVB parent company, and SVB parent is bankrupt, the £1 will get added to the funds that will make the SVB parent's creditors "whole", who outrank shareholders in bankruptcy.

And yes, the £1 has to get actually transferred, it is important for legal certainty e.g. with regard to https://en.wikipedia.org/wiki/Consideration_under_American_l....

I would give up a fair amount to listen in on those conversations and negotiations.

“No we want £2”

“£1 take it or leave it”

(alt source) dupe: https://news.ycombinator.com/item?id=35132181

A classic "fiver" would've been way better. Can't get much for a pound these days anyway.

You missed on obvious new meme "Bought a bank from Poundshop today" :)

Can still get two Freddo's.

Safer hands than HBOS

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