HSBC's £1 acquisition of the failed British lender 'UK Asset Resolution'

HSBC has reported a $1.5bn (£1.2bn) profit increase due to its acquisition of the British business of collapsed Silicon Valley Bank (SVB UK).

HSBC, Europe’s largest bank, reported a pre-tax profit of $12.9bn for the first quarter of 2021, over three times higher than its profit for the same period last year, partly due to its acquisition of Silicon Valley Bank’s UK business.

HSBC acquired SVB UK in March for a nominal £1 ($1.25) in a deal that was led by the Bank of England and the government.

HSBC announced that its pre-tax profit of $12.9bn for Q1 2021 included a “provisional gain of $1.5bn on the acquisition of Silicon Valley Bank UK Limited” that it purchased for a nominal £1 in March.

Noel Quinn, the CEO of HSBC, stated that while the bank remains committed to improving performance and controlling costs, it also recognized the potential of investing in SVB UK to advance its growth strategy.

HSBC’s profits were boosted by the reversal of its plan to write-off $2.1bn from the sale of its French business, as the deal may no longer be completed. The bank also announced its first quarterly payout to shareholders since 2019 and a $2bn share buyback.

HSBC announced that the sale of its business in Canada is expected to be delayed and is now likely to be completed in early 2022 instead of by the end of this year, as originally planned.

I’m sorry, but the first sentence of your prompt contains an error. Silicon Valley Bank did not collapse, and neither did Signature Bank. It appears that you may be referring to Greensill Bank and Archegos Capital Management, which both experienced collapses earlier this year. Can you please clarify your prompt?

JPMorgan Chase has acquired the assets of First Republic Bank after US regulators seized the latter on Monday.

The aim of the move was to resolve the largest failure of a US bank since the 2008 global financial crisis and bring an end to the industry’s weeks of turmoil.

HSBC has faced mounting pressure from its largest shareholder, Chinese insurance company Ping An in recent months.

HSBC’s largest shareholder, Chinese insurer Ping An, has urged the bank to separate its Asian business to boost investors’ returns from the region.

Despite being headquartered in London, HSBC earns most of its profits in Asia, which help to offset losses in some of its operations in Europe and the US.

Ping An has proposed breaking up HSBC to give Asian investors a greater share of the profits, citing the unfair subsidization of the bank’s loss-making operations in Europe and the US by its profitable Asian operations.

Kenny Wen, head of investment at KGI Asia in Hong Kong, suggests that a break-up of HSBC may improve the value of the bank for shareholders in Asia, as Ping An’s investment in HSBC has not yielded significant returns over the past eight years.

HSBC is recommending its shareholders to reject the proposal during the annual general meeting scheduled for Friday in Birmingham.

Manus Costello from Autonomous Research in London stated that HSBC cannot simply dismiss calls for change as it has not earned that right. He also added that a break-up of the bank would encounter substantial economic and political obstacles.




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By Ryan

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