The bank’s new owner approved bonuses of £15 million to £20 million for SVB UK workers this week.
The British arm of Silicon Valley Bank (SVB UK) paid out employee incentives totaling millions of pounds just days after its insolvency was averted by a Bank of England-orchestrated rescue deal.
HSBC, the new proprietor of SVB UK, approved payouts to staff, including senior executives, earlier this week.
According to sources, the bonus allocation was “modest” and totaled between £15m and £20m.
On Saturday, it was unclear how much British bank CEO Erin Platts and her top colleagues received.
According to an insider, the bonus payments reflect HSBC’s confidence in the talent pool at its new subsidiary, and the vendor was eager to honor previously agreed-upon payments to help retain key personnel.
SVB UK, a profitable business that employs about 700 people in the United Kingdom, was brought to the verge of insolvency last weekend by the difficulties of its American parent company.
According to insiders, the incentives would not have been paid this week if the company had not been acquired profitably.
The near-collapse of SVB UK rendered the stock held by senior executives and other employees worthless, according to one observer.
In the United States, its banking division has been taken over by the government, and its holding company. SVB Financial Group, has filed for Chapter 11 bankruptcy protection while seeking purchasers for its other assets.
Last week’s reports said the Santa Clara bank paid US workers bonuses hours before it failed.
Challenger institutions, such as Oaknorth and The Bank of London, were interested in an emergency auction in which the prime minister, Rishi Sunak, played a crucial role.
HSBC, Europe’s biggest bank, acquired SVB UK for £1 before London markets opened on Monday.
It was exempt from bank segregation regulations enacted after the 2008 financial crisis.
Chancellor Jeremy Hunt said the intervention was necessary to preserve money for some of the UK’s most promising startups.
Hundreds of thousands of employees are supported by the United Kingdom’s technology industry, which is truly world-leading, he said.
We worked hard to fulfill this promise and find a solution that will reassure SVB UK clients.
“[This] ensures customer deposits are protected and they can conduct normal banking operations without taxpayer support.”
Hundreds of tech entrepreneurs had intensively lobbied the government last weekend regarding the precarious condition of SVB UK.
“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 broader economy, both today and historically,” they said.
The founders warned Mr. Hunt that the demise of SVB UK would “paralyze the industry and set the ecosystem back twenty years.”
They wrote, “many businesses will be forced into liquidation overnight.”
Ms. Platts, who has worked in the lender’s British operations since 2007, will retain her position following discussions with Ian Stuart, the chief executive officer of HSBC UK.
The independent directors of SVB UK, including chairman Darren Pope, are anticipated to remain in place under HSBC’s ownership.
This indicates HSBC’s intention to allow the technology-focused lender to continue operating with a degree of autonomy.
According to a source, Silicon Valley Bank may collapse in the UK if it fails in the US.
The turmoil at SVB has the potential to escalate into a much broader banking crisis, as the Financial Times reported on Friday evening that UBS is in talks to acquire part or all of its Zurich-based rival, Credit Suisse.
US banks like Bank of America and JP Morgan gave the First Republic a $30 billion deposit reprieve on Thursday.
However, the company’s stock continued to decline on Friday, causing renewed concerns about its health.
A spokesperson for SVB UK declined to comment on this week’s bonus disbursements.
