HSBC Holdings has emerged as a potential ‘white knight’ bidder for Silicon Valley Bank (SVB) UK as the government and regulators seek to avert the lender’s insolvency.
Sky News has learnt that HSBC was on Sunday night exploring a bid for the British arm of the stricken technology-focused lender, joining a slew of smaller rivals in the emergency sale process triggered by the collapse into government ownership of its American parent.
One insider said a deal remained uncertain and that a decision by the Bank of England to place SVB UK into insolvency proceedings could still take place in the coming hours.
JP Morgan, the American banking behemoth, has also been asked to examine a bid.
HSBC is thought to be the likelier of the two global lenders to pursue a transaction, although it declined to comment and it remained possible that it would walk away from the process.
The expedited nature of the sale raised doubts among some observers that HSBC would be able to move sufficiently quickly to acquire SVB UK before the business is placed into insolvency.
Any deal would not be material to HSBC in the context of its global balance sheet, but would sharpen its exposure in its home market of the UK to corporate clients in the tech and biotech sectors.
HSBC and JP Morgan were among the large international banks, also including Barclays and Lloyds Banking Group, which were asked to consider participating in the pre-insolvency sale process.
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Lloyds was also said to be deliberating on Sunday night about whether to submit an offer.
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1:39
A business lender founded by a prominent former Conservative Party donor is in talks to buy the British operations of Silicon Valley Bank, the US lender which collapsed last week.
Earlier on Sunday, both Oaknorth Bank, a business lender founded by a prominent former Conservative Party donor, and The Bank of London, a new clearing bank, submitted formal bids to buy SVB UK.
Interest from ADQ, an Abu Dhabi state-backed investment vehicle, is thought to have cooled.
The government and banking regulators are racing to find a solution to the crisis before markets open on Monday morning, with Rothschild, the investment bank, asked to handle the quickfire process by SVB UK with the consent of the Bank of England.
The Treasury said in a statement on Sunday that the government was working on funding solutions to help hundreds of SVB UK clients meet cashflow obligations.
“The UK has a world-leading tech sector, with a dynamic start-up and scale-up ecosystem,” it said.
“The government recognises that, given the importance of Silicon Valley Bank to its customers, its failure could have a significant impact on the liquidity of the tech ecosystem.
“The government is treating this issue as a high priority, with discussions between the Governor of the Bank of England, the Prime Minister and the Chancellor taking place over the weekend.
Image: JP Morgan, the American banking behemoth, has also been asked to examine a bid
“The government is working at pace on a solution to avoid or minimise damage to some of our most promising companies in the UK and we will bring forward immediate plans to ensure the short term operational and cashflow needs of Silicon Valley Bank UK customers are able to be met.”
The implosion of SVB’s US-listed parent company, which has been taken into government control, represents one of the biggest global banking collapses since the financial crisis of 2008.
UK depositors stand to receive up to £85,000 as part of the resolution of the British arm of SVB, sparking fears about the fate of substantial amounts of funding in the start-up community.
“We are working at pace on a solution we will bring forward very soon plans to make sure people are able to meet their cashflow requirements, pay their staff,” Jeremy Hunt, the chancellor, told Sophy Ridge on Sunday.
“But obviously what we want to do is to find a longer-term solution that minimises or even avoids completely losses to some of our most promising companies.”
On Saturday, dozens of early-stage companies wrote to Mr Hunt to warn of “an existential threat to the UK tech sector”.
In a letter seen by Sky News, founders including those from Adzuna, Curve and Thriva called on Mr Hunt to intervene.
“The majority of the most exciting and dynamic tech businesses bank with SVB and have no or limited diversity in where their deposits are held,” the draft letter said.
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5:20
Britain’s biggest banks have been given 24 hours to rescue Silicon Valley Bank UK from collapse as the Bank of England prepares to place it into an insolvency process.
“This weekend the majority of us as tech founders are running numbers to see if we are potentially technically insolvent.
“The impact of this is far greater than our individual businesses.
“The Bank of England’s assessment that SVB going into administration would have limited impact on the UK economy displays a dangerous lack of understanding of the sector and the role it plays in the wider economy, both today and in the future.”
The founders warned Mr Hunt, who will deliver his Budget statement on Wednesday, that the collapse of SVB UK would “cripple the sector and set the ecosystem back 20 years”.
“Many businesses will be sent into involuntary liquidation overnight,” they wrote.
“Many other businesses, both in the tech sector and the wider economy – the customers and suppliers of these businesses – will be negatively impacted by these businesses going bankrupt.”
Interpath Advisory has been lined up to handle the insolvency process in the UK if a buyer cannot be found.
Donald Trump’s trade war escalation has sparked a global sell-off, with US stock markets seeing the biggest declines in a hit to values estimated above $2trn.
Tech and retail shares were among those worst hit when Wall Street opened for business, following on from a flight from risk across both Asia and Europe earlier in the day.
Analysis by the investment platform AJ Bell put the value of the peak losses among major indices at $2.2trn (£1.7trn).
The tech-focused Nasdaq Composite was down 5.8%, the S&P 500 by 4.3% and the Dow Jones Industrial Average by just under 4% at the height of the declines. It left all three on course for their worst one-day losses since at least September 2022 though the sell-off later eased back slightly.
Analysts said the focus in the US was largely on the impact that the expanded tariff regime will have on the domestic economy but also effects on global sales given widespread anger abroad among the more than 180 nations and territories hit by reciprocal tariffs on Mr Trump‘s self-styled “liberation day”.
They are set to take effect next week, with tariffs on all car, steel and aluminium imports already in effect.
Price rises are a certainty in the world’s largest economy as the president’s additional tariffs kick in, with those charges expected to be passed on down supply chains to the end user.
The White House believes its tariffs regime will force employers to build factories and hire workers in the US to escape the charges.
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5:07
The latest numbers on tariffs
Economists warn the additional costs will add upward pressure to US inflation and potentially choke demand and hiring, ricking a slide towards recession.
Apple was among the biggest losers in cash terms in Thursday’s trading as its shares fell by almost 9%, leaving it on track for its worst daily performance since the start of the COVID pandemic.
Concerns among shareholders were said to include the prospects for US price hikes when its products are shipped to the US from Asia.
Other losers included Tesla, down by almost 6% and Nvidia down by more than 6%.
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3:54
PM: It’s ‘a new era’ for trade and economy
Many retail stocks including those for Target and Footlocker lost more than 10% of their respective market values.
The European Union is expected to retaliate in a bid to put pressure on the US to back down.
The prospect of a tit-for-tat trade war saw the CAC 40 in France and German DAX fall by more than 3.4% and 3% respectively.
The FTSE 100, which is internationally focused, was 1.6% lower by the close – a three-month low.
Financial stocks were worst hit with Asia-focused Standard Chartered bank enduring the worst fall in percentage terms of 13%, followed closely by its larger rival HSBC.
Among the stocks seeing big declines were those for big energy as oil Brent crude costs fell back by 6% to $70 due to expectations a trade war will hurt demand.
The more domestically relevant FTSE 250 was 2.2% lower.
A weakening dollar saw the pound briefly hit a six-month high against the US currency at $1.32.
There was a rush for safe haven gold earlier in the day as a new record high was struck though it was later trading down.
Sean Sun, portfolio manager at Thornburg Investment Management, said of the state of play: “Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade.”
He warned there was a big risk of escalation ahead through countermeasures against the US.
Sandra Ebner, senior economist at Union Investment, said: “We assume that the tariffs will not remain in place in the announced range, but will instead be a starting point for further negotiations.
“Trump has set a maximum demand from which the level of tariffs should decrease”.
She added: “Since the measures would not affect all regions and sectors equally, there will be winners and losers as in 2018 – although the losers are more likely to be in the EU than in North America.
“To protect companies in Europe from the effects of tariffs, the EU should not respond with high counter-tariffs. In any case, their impact in the US is not likely to be significant. It would be more efficient to provide targeted support to EU companies in the form of investment and stimulus.”
British companies and business groups have expressed alarm over President Donald Trump’s 10% tariff on UK goods entering the US – but cautioned against retaliatory measures.
It comes as Business Secretary Jonathan Reynolds launched a consultation with firms on taxes the UK could implement in response to the new levies.
A 400-page list of 8,000 US goods that could be targeted by UK tariffs has been published, including items like whiskey and jeans.
On so-called “Liberation Day”, Mr Trump announced UK goods entering the US will be subject to a 10% tax while cars will be slapped with a 25% levy.
The government’s handling of tariff negotiations with the US to date has been praised by representative and industry bodies as being “cool” and “calm” – and they urged ministers to continue that approach by not retaliating.
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5:07
The latest numbers on tariffs
Business lobby group the CBI (Confederation of British Industry) said: “Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices”.
Industry body the British Retail Consortium (BRC) also cautioned: “Retaliatory tariffs should only be a last resort”.
‘Deeply troubling’
While a major category of exports, in the form of services – like finance and information technology (IT) – has been exempted from the tariffs, the impact on UK business is expected to be significant.
Mr Trump’s announcement was described as “deeply troubling for businesses” by the CBI’s chief executive Rain Newton-Smith.
The Federation of Small Businesses (FSB) also said the tariffs were “a major blow” to small and medium companies (SMEs), as 59% of small UK exporters sell to the US. It called for emergency government aid to help those affected.
“Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat,” the FSB’s policy chair Tina McKenzie said. “The fallout will stifle growth” and “hurt opportunities”, she added.
Companies will need to adapt and overcome, the British Export Association said, but added: “Unfortunately adaptation will come at a cost that not all businesses will be able to bear.”
Watch dealer and component seller Darren Townend told Sky News the 10% hit would be “painful” as “people will buy less”.
“I am a fan of Trump, but this is nuts,” he said. “I expect some bad months ahead.”
Industry body Make UK said the 25% tariffs on cars, steel and aluminium would in particular be devastating for UK manufacturing.
Cars hard hit
Carmakers are among the biggest losers from the world trade order reshuffle.
Auto industry body the Society of Motor Manufacturers and Traders (SMMT) said the taxes were “deeply disappointing and potentially damaging measure”.
“These tariff costs cannot be absorbed by manufacturers”, SMMT chief executive Mike Hawes said. “UK producers may have to review output in the face of constrained demand”.
The new taxes on cars took effect on Thursday morning, while the measures impacting car parts are due to come in on 3 May.
Economists immediately started scratching their heads when Donald Trump raised his tariffs placard in the Rose Garden on Wednesday.
On that list he detailed the rate the US believes it is being charged by each country, along with its response: A reciprocal tariff at half that rate.
So, take China for example. Donald Trump said his team had run the numbers and the world’s second-largest economy was implementing an effective tariff of 67% on US imports. The US is responding with 34%.
How did he come up with that 67%? This is where things get a bit murky. The US claims it studied its trading relationship with individual countries, examining non-tariff barriers as well as tariff barriers. That includes, for example, regulations that make it difficult for US exporters.
However, the actual methodology appears to be far cruder. Instead of responding to individual countries’ trade barriers, Trump is attacking those enjoying large trade surpluses with the US.
A formula released by the US trade representative laid this bare. It took the US’s trade deficit in goods with each country and divided that by imports from that country. That figure was then divided by two.
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So, in the case of China, which has a trade surplus of $295bn on total US exports of $438bn, that gives a ratio of 68%. The US divided that by two, giving a reciprocal tariff of 34%.
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0:58
PM will ‘fight’ for deal with US
This is a blunt measure which targets big importers to the US, irrespective of the trade barriers they have erected. This is all part of Donald Trump’s efforts to shrink the country’s deficit – although it’s US consumers who will end up paying the price.
But what about the small number of countries where the US has a trade surplus? Shouldn’t they actually be benefiting from all of this?
That includes the UK, with whom the US has a surplus (by its own calculations) of $12bn. By its own reciprocal tariff formula, the UK should be benefitting from a “negative tariff” of 9%.
Instead, it has been hit by a 10% baseline tariff. Number 10 may be breathing a sigh of relief – the US could, after all, have gone after us for our 20% VAT rate on imports, which it takes issue with – but, by Trump’s own measure, we haven’t got off as lightly as we should have.