LONDON — HSBC acquired Silicon Valley Bank UK earlier this week, but will those tech clients stay with HSBC or will they turn to neobanks?
That was a question from Chris Skinner, chief executive of The Finanser, on Tuesday at the FinovateEurope event in London.
“HSBC got a very good deal in my opinion as there are some valuable future high-growth tech, bio, fintech and other firms in that SVB U.K. book they’ve acquired,” he said. “Whether HSBC can keep the U.K. tech customers culturally is another matter because the ex-SVB U.K. techies won’t like the brand. They may turn to neobanks like Starling, Revolut instead.”
Skinner blamed SVB’s failure on “just bad management.” He cited SVB‘s move to put $80 billion into mortgage-backed securities (MBS) seeking higher returns in an era of low interest rates that now has ended, leaving it exposed.
“They couldn’t liquidate their long-term MBSes to cover the $48 billion in withdrawal requests being made by panicked fintech start-up CEOs, tech firm supremos and others when [interest rates] went up and worries about its liquidity arose,” he said. Essentially, the bank didn’t have enough liquidity to cover what it saw as an unexpected interest rate upward trend, he added.
Signature Bank is another casualty of the recent spike in interest rates, and was closed over the weekend by the Federal Deposit Insurance Corp. “Fintechs like Stripe have lost $30 billion of value in a year, and Klarna has fallen too,” Skinner said in his address, “but they’ll come back.”
