The British arm of Silicon Valley Bank (SVB UK) has handed out millions of pounds in employee bonuses just days after its insolvency was averted through a Bank of England-orchestrated rescue deal.
Sky News has learnt that the payouts to staff including its senior executives were signed off by HSBC, SVB UK’s new owner, earlier this week.
Sources described the bonus pool as “modest”, and said it totalled between £15m and £20m.
It was unclear on Saturday how much had been awarded to Erin Platts, the UK bank’s chief executive or her senior colleagues.
One insider said the bonus payments were a signal of HSBC’s confidence in the talent base at its new subsidiary and that the buyer had been keen to honour previously agreed payments in order to help retain key staff.
Employing about 700 people in Britain, SVB UK is a profitable business but was brought to the brink of collapse last weekend by the travails of its American parent company.
Had it not been acquired solvently, the bonuses would not have been paid this week, according to insiders.
One pointed out that stock held by senior executives and other employees had been rendered worthless by SVB UK’s near-collapse.
In the US, its banking arm has been taken into government ownership and its holding company, SVB Financial Group, has now filed for Chapter 11 bankruptcy protection as it seeks buyers for its other assets.
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Bonuses were also paid to its US staff just hours before the Santa Clara-based bank collapsed, according to reports last week.
An emergency auction in which Rishi Sunak, the prime minister, played a pivotal role drew interest from challenger banks including Oaknorth and The Bank of London.
HSBC, Europe’s biggest lender, struck a deal before markets opened in London on Monday to buy SVB UK for £1.
It was given a waiver from bank ring-fencing rules introduced after the 2008 financial crisis.
Jeremy Hunt, the chancellor, said the rescue had been critical to preserving funding to some of the UK’s most promising start-up companies.
“The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs,” he said.
“We have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.
“[This] ensures customer deposits are protected and can bank as normal, with no taxpayer support.”
The government had been lobbied intensively last weekend by hundreds of tech entrepreneurs about the parlous state of SVB UK.
They warned of “an existential threat to the UK tech sector”, adding: “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 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.
Sky News revealed this week that Ms Platts, who has worked in the lender’s British operations since 2007, would remain in her job following talks with Ian Stuart, the HSBC UK chief executive.
SVB UK’s independent directors, who include chairman Darren Pope, are also expected to stay on under HSBC’s ownership.
That indicates HSBC’s intention to enable the technology-focused lender to operate with some degree of autonomy on an ongoing basis.
However, the Silicon Valley Bank brand may disappear in the UK, depending upon its fate in the US, one insider said.
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The turmoil at SVB has threatened to escalate into a much broader banking crisis, with the Financial Times reporting on Friday evening that UBS is in talks to take over part or all of its Zurich-based peer, Credit Suisse.
In the US, a group of large lenders including Bank of American and JP Morgan provided a $30bn deposit lifeline to First Republic on Thursday.
However, its shares continued to slump on Friday, raising renewed fears for its health.
A spokesman for SVB UK declined to comment on the bonus payments handed out this week.
Tesco Clubcard changes: Supermarket to cut value of rewards scheme
Tesco is cutting the value of its Clubcard rewards scheme, with customers no longer able to get triple their value when they cash them in with scheme partners.
The Tesco Clubcard reward partner scheme lets customers collect points while shopping and exchange them for vouchers for theme parks, restaurants and day trips.
Points used to be worth triple their value when they were exchanged – but from June will only be worth double.
The change will kick in on 14 June.
In a statement, Tesco said it was making the change “to make sure we can continue to provide a wide range of rewards that meet the needs of all our Tesco Clubcard members, while keeping prices low for everyone”.
But some Tesco customers expressed their outrage online given the context of the cost of living crisis.
One person tweeted: “Absolutely disgraceful from Tesco at a time when people are struggling enough with high prices and costs. More important to think of the profits I guess.”
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One Tesco customer said this could spell the end of their loyalty: “Main reason I hadn’t switched to Aldi or Lidl was because we use points for family meals out etc…one step closer to ditching Tesco now!”
Another was more measured in their response: “Card benefits used to be much, MUCH better – but still worthwhile.”
Tesco said it was extending the time period when partner rewards would be valid to 12 months, so any points cashed in for triple their value before 13 June can be used for a year.
In November, two million Tesco customers had Clubcard vouchers worth £13m that were due to expire.
If all those customers had cashed them in using the rewards scheme, the total savings would have totalled £39m.
MPs describe Stormont brake aspect of Windsor Framework as ‘practically useless’
A group of Eurosceptic MPs has described the Stormont brake – a key part of Rishi Sunak’s renegotiated Brexit deal – “practically useless”.
Mark Francois, chairman of the European Research Group (ERG), spoke after the group commissioned its “star chamber” of legal experts to pore over the Windsor Framework, the UK’s deal with the EU on post-Brexit arrangements when it comes to Northern Ireland.
Mr Francois said that among its initial findings were that EU law was “supreme” in Northern Ireland and that the rights of its people secured in the 1800 Act of Union had still not been restored.
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And in his harshest criticism, he said the Stormont brake – the mechanism that would allow a minority of politicians in Belfast to formally flag concerns about the imposition of new EU laws in Northern Ireland – was “practically useless”.
However, he said the ERG would meet again on Wednesday before deciding its approach to a Commons vote on the brake scheduled to take place on the same day.
The ERG’s criticisms of the Windsor Framework will be a blow to the prime minister, who had been hoping to secure widespread approval for his Brexit deal.
While Mr Sunak does not need the votes of the DUP and ERG to get the legislation through parliament, he will not want to rely on Labour’s approval and will be looking to limit the size of any potential Tory rebellion.
The ERG’s preliminary verdict comes as little surprise after the Democratic Unionist Party (DUP) confirmed it would vote against the Stormont brake in the Commons vote.
In a statement on Monday, DUP leader Sir Jeffrey Donaldson said while the Windsor Framework represented “significant progress” in addressing concerns with the Northern Ireland Protocol, it did not deal with some of the “fundamental problems at the heart of our current difficulties”.
Sir Jeffrey said the brake “is not designed for, and therefore cannot apply, to the EU law which is already in place and for which no consent has been given for its application”.
“Whilst representing real progress, the ‘brake’ does not deal with the fundamental issue which is the imposition of EU law by the protocol,” he added.
The NI protocol was agreed as part of Boris Johnson’s “oven ready” Brexit deal and was designed to prevent a hard border in the interests of preserving the peace secured in the Good Friday Agreement.
But the protocol has led to unhappiness in the DUP, who say it has created trade barriers between Great Britain and Northern Ireland and undermined its place in the UK.
Last February the DUP pulled out of the arrangement for devolved government in Northern Ireland in protest at the protocol, effectively leaving the region without government.
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The UK and Brussels agreed the Windsor Framework as a way to incentivise the return of power-sharing in Northern Ireland and to allay some of the key concerns of Unionists.
Under the agreement there will now be a green lane for goods that are destined for Northern Ireland will no longer be subject to time-consuming paperwork, checks and duties.
But Mr Francois said that the green lane “is not really a green lane at all”.
The prime minister’s official spokesperson said on Tuesday that the Windsor Agreement was a “good deal” for the people of Northern Ireland that went “significantly beyond” the previous protocol.
The spokesperson said the Stormont Brake was a “significant step change in what had previously been agreed” and that it had dealt with the “democratic deficit” flagged by the DUP, whereby EU laws apply in Northern Ireland without the influence of politicians in Stormont.
The Stormont Brake remains the “only avenue” to change Northern Ireland’s status as being automatically aligned to EU rules, they added.
“A vote against the brake, in factual terms, would lead to automatic alignment with the EU with no say at all,” the spokesman said.
Just Eat to axe around 1,700 delivery worker jobs
Delivery giant Just Eat has announced it is to axe 1,700 jobs as it ceases to employ its delivery riders and drivers.
Instead it will use gig economy workers to deliver food in the UK, as opposed to the hybrid system of employees and self-employed workers, despite strong comments by the chief executive against the gig economy.
A further 170 people working in Just Eat’s operational department are also impacted.
Delivery employees have been given six weeks’ notice with pay and it is understood office staff will begin a process of redundancy and may be moved to other parts of the business.
While the company could not provide Sky News with the number of delivery riders and drivers it uses in the UK, it did say employees were only a small part of overall delivery operations and only operated in certain parts of six UK cities.
The employment model was rolled out in London in December 2020 and Just Eat became the first food delivery aggregator in the UK to employ delivery people.
Company chief executive Jitse Groen said in February 2021 that the gig economy “has led to precarious working conditions across Europe, the worst seen in a hundred years”.
“The gig economy comes at the expense of society and workers themselves,” he wrote in the Financial Times while listing company plans to employ delivery workers.
Just Eat Takeaway.com said the employee model will continue in Europe.
However, delivery riders and drivers are not employed in all of the company’s European markets. None are employed in Slovakia and Ireland.
The job cuts come after the company saw a 9% slump in customer numbers last year as diners returned to pubs and restaurants.
“Just Eat UK is reorganising and simplifying its delivery operation as part of the ongoing goal of improving efficiency,” a spokesperson said.
“There will be no impact to the service provided to partners and customers.”
Just Eat Takeaway.com is the largest food online ordering and delivery service in Europe. It had been the largest outside China after the purchase of Grubhub in June 2020 but has since sold parts of the business.
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