From the Ashes of SVB UK, HSBC Gives Birth to New Innovation Banking Unit

HSBC announced the launch of its HSBC Innovation Banking division today (Monday), integrating the formerly independent Silicon Valley Bank UK (SVB UK) and initiating dedicated innovation teams in the US, Hong Kong, and Israel. This maneuver aims to bolster a global, interconnected, specialized banking offering to cater to a wide array of innovative companies and their investors.

From SVB UK to HSBC Innovation Banking

The unveiling took place at London Tech Week, an event focusing on innovation and new technologies. This confirmed Sky News' speculation from late May that HSBC would want to use the acquired institution as an innovation-focused unit.

HSBC acquired the British division of the defunct SVB in March for a mere one pound after US authorities forced the institution to cease further operations a few days earlier, causing panic in the global banking markets. At the time of the acquisition, SVB UK held deposits worth £6.7 billion and granted loans valued at £5.5 billion, recording a pre-tax profit of £88 million in 2022.

However, information provided during London Tech Week, indicates that the unit's operational profile will change and it will be transformed into HSBC Innovation Banking. It will focus on providing services to a few thousand innovative companies in the UK and worldwide soon.

[ HSBC now has a world-class team focused on innovation companies, their founders, and their investors,] Noel Quinn, the Chief Executive Officer (CEO) of HSBC, commented. He also mentioned the importance of the tech and life sciences sector to the global economy and highlighted the bank's intention to amplify these capabilities.

The UK Prime Minister, Rishi Sunak, gave his nod of approval, celebrating HSBC Innovation Banking as a resource that will empower innovative companies to harness their potential, generate more employment, and seize new global opportunities.

[ The UK is home to world-leading tech and life sciences sectors, and I am proud of the role the British government has played in securing their future and enabling them to thrive,] Sunak added.

HSCB Innovation Banking to Boost Startups

Erin Platts, the head of HSBC Innovation Banking in the UK, explained the role of the new division as a catalyst for UK innovation businesses, facilitating their growth and competitiveness on the global stage.

HSBC Innovation Banking plans to provide a combination of deep sector expertise, custom client service, robust financial strength, and worldwide reach to its client base, consisting of approximately 3,000 innovation businesses and funds in the UK. The aim is to foster the growth aspirations of tech and life science companies.

The new division comprises over 650 employees in the UK and Nordics, while a specialized team of more than 40 has been assembled across the United States. In addition, a few dozen of newly recruited bankers will join the offices in Tel Aviv and Hong Kong.

The deposit-holding legal entity for HSBC Innovation Banking in the UK is named HSBC Innovation Bank Limited, which was formerly Silicon Valley Bank UK Limited. This entity will continue to operate separately as a subsidiary, maintaining its headquarters at the office in London. The HSBC Innovation Banking brand is expected to roll out globally in the upcoming months gradually.

Meanwhile, HSBC Bank USA has been hit with a $45 million penalty by the US derivatives industry regulator for purportedly allowing 'manipulative and deceptive trading' among its traders and neglecting to maintain records of its business communications. The Commodity Futures and Trading Commission (CFTC) disclosed the financial sanction in May, confirming that it had reached an agreement with the subsidiary of the multinational British banking corporation.