HSBC, the global banking giant, has unveiled its latest venture, HSBC Launches Innovation Banking, a subsidiary of HSBC UK dedicated to providing banking services to the startup, investor, and wider tech community. Following SVB UK’s financial crisis, HSBC made an emergency acquisition of the company for a mere £1 in March, leading to this strategic move. Now, under its new ownership, SVB UK is undergoing rebranding and expansion.
HSBC Innovation Banking will be more than just a UK-based endeavor. By integrating teams from the United States, Israel, and Hong Kong, HSBC has assembled a workforce of over 700 employees for its new venture.While the initial client base is primarily located in the UK, with approximately 3,000 customers, HSBC has plans to broaden its reach globally.
Interestingly, HSBC’s foray into the technology sector sets the stage for competition with First Citizens, the majority stakeholder in SVB’s former banking operations in the United States. HSBC currently faces a lawsuit from First Citizens, alleging that the bank unlawfully recruited SVB staff, including key figure David Sabow, former head of SVB in the US. Sabow will now take the helm of HSBC Innovation Banking in the US. The timing of the lawsuit suggests that it was likely initiated in anticipation of today’s official announcement.
Erin Platts, previously at the helm of SVB UK, has assumed the role of CEO for HSBC Innovation Banking UK, showcasing her pivotal role in leading this new business unit.
HSBC’s entry into the rapidly expanding technology sector comes at a pivotal moment. Before the COVID-19 pandemic, technology companies enjoyed abundant funding opportunities. However, in the last 18 months, the flow of funds has significantly diminished, contributing to SVB’s downfall. HSBC is betting that by launching a revitalized effort during a quieter market period, it can position itself for substantial gains. Moreover, having the backing of a massive banking behemoth like HSBC will provide a buffer against potential setbacks, something SVB lacked.
While the exact size of HSBC Innovation Banking’s initial assets under management remains undisclosed, HSBC’s acquisition of SVB UK included taking on loans worth approximately £5.5 billion and deposits totaling around £6.7 billion. During the fiscal year concluding on December 31, 2022, SVB UK achieved an impressive pre-tax profit of £88 million. As part of the acquisition, HSBC estimated SVB UK’s tangible equity to be around £1.4 billion, solidifying the bank’s substantial financial position.
Noel Quinn, Group Chief Executive of HSBC, underscores the significance of the UK’s technology and life sciences sectors in driving economic growth and global exports. Quinn expressed confidence in the newly formed HSBC Innovation Banking, stating that it combines world-class innovation expertise with the financial strength and global reach of HSBC to support international growth for its clients.
HSBC Innovation Banking will cater not only to the technology industry but also to related sectors such as startup businesses and financiers in fields like life sciences. UK Prime Minister Rishi Sunak praises the launch of HSBC Innovation Banking, acknowledging its potential to unlock opportunities, generate employment, and enhance the UK’s standing as a science and technology powerhouse.
With HSBC’s entry into the realm of innovation banking, the bank is poised to become a formidable player in supporting and nurturing startups, investors, and technology-driven enterprises.
