Quinn supports UK’s tech future: HSBC’s purchase of SVB will enhance its reputation in Whitehall and with the public, says ALEX BRUMMER
The emergence of HSBC as the white knight in the rescue of the UK branch of Silicon Valley Bank should be a big confidence boost.
HSBC Chief Executive Noel Quinn is leading a rearguard action to hold the vast Asian bank together in the face of sustained criticism from its biggest investor, Chinese insurer Ping An.
Quinn is keeping critics at bay by shedding underperforming operations in Canada and Europe, cutting costs and focusing on Asia.
White Knight: HSBC’s purchase of the UK arm of Silicon Valley Bank demonstrates its commitment to the UK’s tech future and also gives it access to a bank with a book value of £1.4bn
Banking turmoil often presents an opportunity. On a different scale, Barclays, led by Bob Diamond, bought the US operations of Chapter 11 Lehman Brothers for $250m (£208m) in 2008, making it the only European financial firm with a a competitive investment bank.
Lloyds (with less success) pounced on HBOS in 2008 with government encouragement. She got what she wanted by accessing Halifax’s market-leading mortgage portfolio.
By the standards of these other deals, HSBC’s purchase of SVB is a joke. Nevertheless, his willingness to step in and make depositors and borrowers whole will enhance his reputation in Whitehall and among the public.
It is a demonstration of HSBC’s commitment to the UK’s technological future and also gives it access to a bank with a book value of £1.4 billion, several thousand high-end businesses technology and the large venture capital sector.
The risk is that HSBC’s bureaucracy and compliance brigade fail to understand the different funding models of the tech sector, where future revenues are amortized years before they are taken, crushing entrepreneurial spirits.
There are inevitably boos from new wave UK lenders such as Bank of London, who saw SVB’s failure as a chance for them to strengthen their footprint and provide tougher opposition to the Big Four. .
Maybe. But in one of the periodic episodes of volatility in the global banking sector, safety always comes first.
Britain’s fintech and challenger banks will have a tough enough task in the days and weeks ahead to reassure depositors and borrowers that they have provided enough resources to weather the storms.
Doubling the risk doesn’t seem very wise.
think small
Tradition dictates that on the Sunday before the Spring Budget, all we would see of the Chancellor were orchestrated shots of him putting the finishing touches on his speech.
Jeremy Hunt’s rise to prominence was different, with the Treasury huddled with the Bank of England for much of the weekend in search of a way to save SVB’s UK arm without putting the money taxpayers at stake.
It hasn’t happened yet. But given the intervention of the US Treasury and Federal Reserve, and Governor Andrew Bailey’s record of building stability at the start of the lockdown in March 2020 and during the Trussonomics-induced pension crisis last year , it could be imminent.
The last thing the Chancellor and the Bank would want is a cascade of failures in the challenger banking sector, which could hamper fintech and innovation.
Since setting out his vision for making the UK the next Silicon Valley, Hunt has focused on unleashing funds sitting in the £10bn UK pensions sector and supporting innovation .
Everything indicates that tomorrow’s budget will be oriented towards the small and medium-sized enterprises which are the backbone of the British economy.
Headline tax rates will be kept low at 19%, new, more generous investment allowances will be approved and some of the tax breaks for R&D will be reinstated.
The Treasury revealed last night that the Chancellor also intends to spend £80m on strengthening 12 Investment Zones. Every little (and it’s not much) helps.
ethnic lift
Here’s a potentially uplifting tweet from self-proclaimed human rights defender Gary Lineker.
The Parker Review, led by former Sainsbury’s boss David Tyler, reports that 96 FTSE companies now have at least one ethnic minority director and 49 have two.
Among FTSE 250 companies, the number has risen to 67% from 55% in 2021. Tyler is now asking the FTSE 350 to include minorities in succession planning and set five-year goals for advancement.
It is also counting on the 50 largest private companies to start appointing at least one ethnic minority director.
The face of British business is changing for the better.
