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HE PEPPERCORN purchase of Silicon Valley Bank's (SVB) UK arm by HSBC for £1, signed and sealed just an hour before markets opened last Monday, left the tech industry breathing a sigh of relief - and has left HSBC with what appears to be a double victory.

That SVB UK's branch had become integral to the tech industry is now well known; but perhaps less talked about is the fact it made (unlike many of its clients) a decent amount of cash, with a profit before tax last year of £88m. That's a drop in the ocean for HSBC but it's not unwelcome, and with confidence restored there is no reason to believe that the lender cannot get back up to that level in decent order.

More interesting though perhaps is what the deal does for HSBC's reputation in the UK which has taken something of a bruising in recent years. Most notably, of course, there was the utterly supine statement issued in 2020 backing Beijing's crackdown on human rights in Hong Kong - a misstep that sits uncomfortably next to HSBC's ESG grand-standing. Ping An's activism, pushing CEO Noel Quinn to spin off the Asian bank into a separate, Hong Kong-listed entity, further gave weight to the theory that HSBC was increasingly a London bank in name only.

In his interview with The Sunday Times at the weekend, Quinn said he couldn't stand by and let the firms banking with SVB UK flounder.

It's unlikely that the shotgun marriage of HSBC and SVB was done for any other reason than smart commercial sense, with the banking giant attaining an unexpected foothold in the start-up and scale-up world. But for HSBC, the PR benefits are certainly a welcome add-on.

(c) 2023 City A.M., source Newspaper