Yahoo Finance FTSE 100 Live: HSBC acquires Silicon Valley Bank UK, lowest FTSE close of 2023
Banking giant HSBC has stepped in to rescue the UK operations of tech sector lender Silicon Valley Bank.
Chancellor Jeremy Hunt said: “HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”
The Bank of England added that all depositors’ money with SVB UK is safe and secure as a result of the transaction.
It added: “SVB UK’s business will continue to be operated normally by SVB UK. All services will continue to operate as normal and customers should not notice any changes.”
FTSE 100 Live Monday
Shares slide continues after SVB collapse
HSBC in £1 rescue deal for SVB’s UK arm
Relief for tech firms as SVB operations continue
Unemployment statistics to come tomorrow
16:58 , Daniel O'Boyle
The ONS will release its monthly labour market statistics tomorrow, including the unemployment rate, which serve as a guage of the effect that interest rate tightening is having on the wider economy.
In February, the seasonally adjusted unemployment rate was 3.7%.
Elsewhere, companies reporting financial results include Yu Energy, Close Brothers and Virgin Wines.
FTSE has lowest close of 2023
16:40 , Daniel O'Boyle
The FTSE 100 closed at 7548.63 today, which is the lowest end-of-day figure of the year.
The fallout from the collapse of Silicon Valley Bank hit banking stocks and the wider financial sector, despite HSBC’s deal to acquire the collapsed bank’s UK arm this morning.
The index of blue-chip companies continued to decline for much of the morning and never seriously rallied, finishing on its lowest point of the day. The FTSE was down by just short of 200 points, or 2.6%, for the day, to 7548.63, which was below the previously yearly low of 7554.09, set on the first trading day of the year.
The index is now down by 4.2% in just two days.
Pound rises towards $1.22
16:00 , Daniel O'Boyle
The pound has risen by almost 1% against the dollaer today, now buying $1.216..
The pound had been hovering around the $1.20 mark for recent weeks, but has now risen to just short of a monthly high as the dollar dipped against all major currencies.
US treasury yields fall below 4%
15:26 , Daniel O'Boyle
The yield on three-year US treasury notes has fallen below 4%, after dropping by almost 50 basis points.
The yield on three-year notes fell to 3.876%, having started the day at 4.303%, after having fallen from 4.566% on Friday, suggesting lower investor confidence.
US stocks rise in opening half-hour
15:08 , Daniel O'Boyle
Shares of US companies have risen this morning, though a number of regional banks faced major declines.
The S&P 500 is up 0.6% to 3885.75, while the Dow Jones is up 0.8% to 32151.16 and the Nasdaq is up 0.9% to 11237.96, after the the FDIC’s decision to make Silicon Valley Bank deposit holders whole.
However, aspects of the banking sector continue to face trouble. First Republic Bank has been the biggest loser on the S&P 500, with shares down 73.3% today, amid concerns over its own future.
SVB is a victim of the US Federal Reserve’s obsession with inflation
14:37 , Daniel Pinto
“The bank failures in the US over the past several days are a stark reminder that the fight against inflation can come at a high cost,” Daniel Pinto writes.
“It was naive on the part of the Federal Reserve to imagine that it could take interest rates from zero to 4.75% in less than a year without creating mayhem: bankruptcies in the financial sector, a brutal dearth of funding for technology companies and more generally for the highest growth and most promising sectors of the economy, major strains in the real estate market and, last but not least, a looming public finance crisis.
“Most governments have borrowed heavily to support their economies during Covid and now find themselves in the untenable situation of having to pay ever higher interest rates to service this debt.
“Where will the money come from if the private sector slows down and banks struggle to play their vital role supporting economic activity?”
Why did Silicon Valley Bank collapse?
13:53 , Simon Hunt
Outside tech circles, Silicon Valley Bank was relatively unknown in the UK. Now, its name is on the lips of almost everyone in business after its sudden collapse – and the swift rescue of its depositors – followed a weekend of high drama.
A wave of fear swept global financial institutions on Friday night, moving into a weekend of crisis talks involving chancellor Jeremy Hunt, Prime Minister Rishi Sunak and the governor of the Bank of England, Andrew Bailey.
Why did Silicon Valley Bank collapse? And how did HSBC rescue its UK arm?
US regional banks hit hard in premarket trading
12:48 , Daniel O'Boyle
Major US stock indices are expected to dip from Friday’s close when they open this morning, the outlook could be tougher for regional banks.
Shares in regional bank First Republic Bank are down by more than 60% in premarket trading, while in Texas-based Comerica’s shares are down almost 20%, while Ohio-based KeyCorp is down more than 11%. Wealth management business Charles Schwab and SunTrust owner Truist are also down more than 6%.
Midday movers
12:02 , Daniel O'Boyle
There were many more fallers than risers on the FTSE 100 this morning, with miners providing the main exception to the downward trend in the market in the wake of Silicon Valley Bank UK’s rescue deal.
Endeavour Mining was the top riser of the day, as the only company with shares up by more than 2%. Many of the biggest fallers, meanwhile, were banks or financial services busnesses, but Standard Chartered was joined by grocery delivery company Ocado and manufacturing company Melrose Industries in the bottom three.
SVB UK to resume operations today
11:17 , Daniel O'Boyle
Silicon Valley Bank UK has announced that it will resume its normal operations today, after HSBC acquired the collapsed bank for £1.
The bank said that clients shouldn’t notice any major changes to operations, but there may be delays in certain areas.
Blue-chip shares slide, Barclays down 5%
10:36 , Graeme Evans
HSBC’s rescue deal for the UK arm of Silicon Valley Bank failed to ease investor nerves today as more selling hit London-listed shares.
The FTSE 100 index tumbled another 2.2% on top of Friday’s 1.7% decline, reflecting market fears over what the US bank’s failure reveals about the mounting risks from higher interest rates and weaker economic growth.
Financial stocks endured more big losses as the FTSE 100 dropped as far as 7550 at one stage, just 100 points higher than where it started the year. The top flight later stood 172.34 points lower at 7576.01.
Standard Chartered and Barclays slumped by around 5%, while UK-focused Lloyds Banking Group lost 4% or 2.3p to 47.5p.
HSBC, which has bought the Silicon Valley Bank’s UK arm for a token £1, fell 20.5p to 572.1p despite picking up a business that made a profit of £88 million last year.
The hope for stock markets this week will be that US inflation figures for February enable the Federal Reserve to step back from another big hike in interest rates later this month.
The possibility of a less aggressive approach has left the pound at its highest level since mid-February at just below $1.21.
The FTSE 250 index tumbled 2.3% or 444.31 points to 18,931.15 , with big fallers including Bank of Georgia and Virgin Money as their shares slumped 10% and 7% respectively.
British Land plans large life sciences hub at Canada Water scheme
10:27 , Daniel O'Boyle
Property giant British Land has unveiled plans for a huge new life sciences hub at its Canada Water scheme in Docklands.
Details of the 300,000sq ft property that could be used by life science occupiers comes as British Land nears completion in May of its Paper Yard building, comprising 30,000sq ft of modular lab space at the same site.
British Land and fund manager AustralianSuper, its joint venture partner on the Canada Water masterplan, have appointed architect Stanton Williams to draw up the latest proposals.
West End and Knightsbridge urge Government to relax Sunday trading laws
10:09 , Daniel O'Boyle
The West End and Knightsbridge have submitted a joint proposal ahead of this week’s Budget, calling on the Government to relax laws governing Sunday trading hours within the two London districts.
The New West End Company (NWEC) and Knightsbridge Partnership said that current Sunday trading laws had made it more difficult for the two areas - classed as the capital’s two “international centres” in the London Plan - to compete with the centres of other major international cities. Under current Sunday trading laws, shops in England may only be open for six hours on Sundays, with most choosing to operate from noon until 6pm.
Both bodies said that a boost was needed, as London has been slower to rebound from Covid-19 than other cities.
Phoenix assets plunge
09:23 , Simon English
SAVINGS giant Phoenix saw its assets plunge by £46 billion this year due to market turmoil that was only increased by the higher interest rates that followed the Liz Truss mini budget in September.
Phoenix looks after the pensions of 12 million Britons, typically funds that are now closed to new business. Brands include Standard Life and now Sun Life of Canada, bought recently.
CEO Andy Briggs says the fall in assets to £259 billion was down to “interest rates and market movements”. But on a day of wider financial turmoil he insisted, “we were as resilient as ever”.
Briggs, formerly of Prudential, Lloyds and Friends Life, welcomed the HSBC deal to rescue the UK arm of Silicon Valley Bank.
“I am very pleased to see HSBC step in. It is important the UK builds on its thriving tech sector,” he said.
Phoenix Group shares are typically held by income funds that rely on its dividend. This year a 5% increase in the final divi to 26p will be paid.
The shares themselves have been less useful – they were down 17p to 600p today, leaving the FTSE 100 business valued at £6 billion.
Depending on which accounting measure is used, Phoenix either made a profit of £1.24 billion, or a loss of £1.76 billion.
Briggs says Phoenix remains deal hungry as more and more pension funds look to seek safety inside a bigger group.
He added: “It is clear that 2023 will present a challenging economic backdrop. However, our business model is designed to be resilient throughout the economic cycle.
"All of which means we expect to see continued organic and M&A growth, to support us in delivering cash, resilience and growth, enabling us to pay a dividend that is sustainable and grows over time.”
Environmental consultancy Ricardo buys water advisory business Aither Pty
09:10 , Daniel O'Boyle
Environmental and engineering consulting company Ricardo has acquired Australia-based water advisory business Aither Pty.
The deal is worth up to £17 million, including £9.6m up front.
“The market for Aither’s services is growing rapidly given the scale of water and natural-resources challenges globally, which is increasing recognition of the need for specialist economics, policy and strategic advice,” Ricardo CEO Graham Ritchie said.
“With the acquisition of Aither, we will be able to expand our capabilities across the entire water value chain, as well as in natural resources, climate resilience and adaption - allowing Ricardo to serve a greater range of our clients’ needs globally.”
HSBC shares lower as FTSE 100 falls again, Direct Line off 5%
08:39 , Graeme Evans
Banking stocks remain under selling pressure today, with HSBC down 7.6p to 585p following its rescue of the UK operations of SVB.
NatWest lost 2.3p to 283.4p and Barclays fell 1.4p to 156p as the FTSE 100 index declined for a fourth successive session, down 0.8% or 62.19 points to 7686.16.
Mining stocks dominated the risers board and there was a recovery for grocery technology business Ocado as shares rallied 5.9p to 457p.
The FTSE 250 index was 25.39 points lower at 19,332.07, with Direct Line Insurance down 5% or 8.4p to 159.25p following its annual results. IP Group, the backer of science and innovation companies, rose 3% or 1.9p to 57.5p.
Bank of London: Decision to sell SVB UK to HSBC is a “missed opportunity"
08:31 , Daniel O'Boyle
Rival bidder the Bank of London has called the Bank of England’s decision to sell Silicon Valley Bank UK to HSBC a “missed opportunity”.
The Bank of London, founded in 2021, confirmed yesterday that it had submitted its own bid to acquire the failed bank’s UK unit after the Bank of England placed SVB UK into insolvency.
“It is great news that a speedy solution has been found for Silicon Valley Bank UK Limited, and the thousands of businesses it supports across fintech, life sciences and new technologies,” the Bank of London said. “It means a vital community helping to foster innovation in our country continues to receive banking services without interruption.
“For many, this will be seen as a missed opportunity to support competition and innovation. It cannot be right that once again the heritage banks that have provided a poor service to UK entrepreneurs over many years benefit from their already dominant position.”
Tech firms reveal SVB exposure
08:19 , Graeme Evans
More than 40 stock market-listed companies have this morning issued statements on their exposure to SVB UK, highlighting the significance of this morning’s rescue package.
They include Naked Wines, which held cash with SVB in a variety of accounts in the United States and UK. Nick Devlin, chief executive of the wine subscription business, said: "We are announcing today that day to day operations are unaffected and we don't expect to incur any loss as a result.”
Reviews platform Trustpilot said SVB UK was its principal banking partner, but that it had alternative relationships that would have allowed continued operations.
Moonpig is among those with no material exposure to SVB UK, although the bank was part of a ten-strong syndicate that provided senior debt facilities to the greetings card business.
Housing associations Sovereign and Network Homes set to merge
08:16 , Daniel O'Boyle
Housing associations Sovereign Housing Association Limited and Network Homes have entered into merger talks to create a business that would own 82,000 homes across the South of England and in London.
The providers said they planned to merge on 1 October, creating a combined entity with annual income of over £830 million.
Network Homes provides housing in London and Hertfordshire, while Sovereign Housing Association operates in a number of counties in the south of England.
They added that the new entity - Sovereign Network Homes - was planning to build 25,000 new homes over the next 10 years.
Heathrow’s Terminal five has busiest day during February half term since the pandemic
07:55 , Michael Hunter
Heathrow Airport said today that over 5 million passengers used London’s main airport during February, with Terminal 5 having its busiest single day since Christmas 2019, before Covid struck.
On the 26th of the month, over 94.000 passengers used Terminal 5.
Top destinations for the half term getaway were Dubai, New York and Madrid. The punctuality of departures was “most consistent it has been in the last 12 months”, said Heathrow, with 98% of travellers through security in under 10 minutes.
Heathrow CEO John Holland-Kaye said “this should give everyone confidence that we are prepared for a successful Easter getaway.”
FTSE 100 set for steady start after SVB rescue
07:45 , Graeme Evans
The FTSE 100 index lost 1.7% on Friday as sentiment towards banking stocks took a hammering on the back of the developments at Silicon Valley Bank.
IG is pointing to a flat start for the FTSE 100 this morning, with US markets also poised for a stronger performance after authorities on both sides of the Atlantic stepped in to support customers of the tech-focused lender.
Analysts at Liberum said this morning: “Perhaps the main takeaway from events at Silicon Valley Bank is that the risks from tightening monetary policy and slowing economic growth are beginning to crystallise. Inappropriately dressed swimmers are being revealed as the tide goes out.
“For banks, the main takeaway is the risk to profitability as net interest margins are squeezed by increasing competition for deposits.”
Direct Line swings to a loss for 2022 ‘tough year’ for FTSE 100 insurer
07:44 , Michael Hunter
Direct Line has branded 2022 a “tough year” as the rising cost of claims in its motor insurance division drove a loss before tax of £45.1 million, down from a profit of £446 million a year ago.
John Greenwood, the acting CEO of the FTSE 100 company called the performance “disappointing”, adding: “2022 was a tough year ... Motor and Home market conditions were challenging, with high claims inflation and regulatory reforms creating substantial headwinds for the business, and we did not navigate these challenges as effectively as we would have wished.
“Exceptional weather and difficult investment markets also significantly impacted our results.”
The Croydon-based company warned that higher-than-expected claims will continue in it motor business during 2023, with capacity constraints in the repair industry left the outlook for claims inflation “uncertain”.
HSBC says SVB deal “excellent strategic sense”
07:34 , Graeme Evans
HSBC’s is paying a token £1 for Silicon Valley Bank UK in a deal that takes on loans of around £5.5 billion and deposits of £6.7 billion.
Chief executive Noel Quinn said SVB UK customers will be able to bank as usual.
He added:: "This acquisition makes excellent strategic sense for our business in the UK.
“It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally.”
Last year, the UK arm of collapsed US tech lender Silicon Valley Bank recorded a profit of £88 million.
HSBC steps in to buy Silicon Valley bank UK
07:08 , Simon Hunt
The Bank of England has sold the UK subsidiary of Silicon Valley Bank to HSBC, it confirmed this morning.
In a statement the bank said: “This action has been taken to stabilise SVBUK, ensuring the continuity of banking services, minimising disruption to the UK technology sector and supporting confidence in the financial system.”
All depositors’ money with SVBUK is safe and secure as a result of this transaction. SVBUK’s business will continue to be operated normally by SVBUK. All services will continue to operate as normal and customers should not notice any changes.
“SVBUK staff remain employed by SVBUK, and SVBUK continues to be a PRA/FCA authorised bank.”
It added: “No other UK banks are directly materially affected by these actions, or by the resolution of SVBUK’s US parent bank. The wider UK banking system remains safe, sound, and well capitalised.”
Bank of London confirms bid to rescue Silicon Valley Bank UK
06:56 , Daniel O'Boyle
The Bank of London has confirmed that it has submitted a bid to rescue Silicon Valley Bank UK, after it collapsed this week.
However, it is likely to face competition, particularly as the Standard understands that the government is eyeing Barclays to take over the failed bank’s UK unit. The government has also received interest from a potential Middle Eastern buyer, according to reports in the Financial Times.
Launched in 2021, the Bank of London is a clearing bank which holds all of its deposits with the Bank of England. Its finance chief Gavin Hewitt previously worked at SVB UK.
Recap: Last week’s top stories
06:51 , Simon Hunt
Good morning. Here’s a summary of our top stories from last week:
Silicon Valley Bank has collapsed after tech firms rushed to withdraw funds, plunging swathes of startups into a cash crisis.
Sheffield-based tech firm WANdisco discovered major fraud and asks for its shares to be suspended in shock to the City.
The billionaire Issa brothers’ business EG Group sold $1.5 billion in property in the US as the pair scramble to bring down the firm’s debt burden amid soaring interest rates.
The UK economy grew by 0.3 per cent in January, rebounding from a drop in December, but fears about stagnation remain, economists said.
