Silicon Valley Bank UK arm hands out £15m in bonuses days after £1 rescue
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The British arm of Silicon Valley Bank (SVB UK) has handed out millions of pounds in employee bonuses just days after its insolvency was averted through a Bank of England-orchestrated rescue deal.
Sky News has learnt that the payouts to staff including its senior executives were signed off by HSBC, SVB UK’s new owner, earlier this week.
Sources described the bonus pool as “modest”, and said it totalled between £15m and £20m.
It was unclear on Saturday how much had been awarded to Erin Platts, the UK bank’s chief executive or her senior colleagues.
One insider said the bonus payments were a signal of HSBC’s confidence in the talent base at its new subsidiary and that the buyer had been keen to honour previously agreed payments in order to help retain key staff.
Employing about 700 people in Britain, SVB UK is a profitable business but was brought to the brink of collapse last weekend by the travails of its American parent company.
Had it not been acquired solvently, the bonuses would not have been paid this week, according to insiders.
One pointed out that stock held by senior executives and other employees had been rendered worthless by SVB UK’s near-collapse.
In the US, its banking arm has been taken into government ownership and its holding company, SVB Financial Group, has now filed for Chapter 11 bankruptcy protection as it seeks buyers for its other assets.
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Bonuses were also paid to its US staff just hours before the Santa Clara-based bank collapsed, according to reports last week.
An emergency auction in which Rishi Sunak, the prime minister, played a pivotal role drew interest from challenger banks including Oaknorth and The Bank of London.
HSBC, Europe’s biggest lender, struck a deal before markets opened in London on Monday to buy SVB UK for £1.
It was given a waiver from bank ring-fencing rules introduced after the 2008 financial crisis.
Jeremy Hunt, the chancellor, said the rescue had been critical to preserving funding to some of the UK’s most promising start-up companies.
“The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs,” he said.
“We have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.
“[This] ensures customer deposits are protected and can bank as normal, with no taxpayer support.”
The government had been lobbied intensively last weekend by hundreds of tech entrepreneurs about the parlous state of SVB UK.
They warned of “an existential threat to the UK tech sector”, adding: “The Bank of England’s assessment that SVB going into administration would have limited impact on the UK economy displays a dangerous lack of understanding of the sector and the role it plays in the wider economy, both today and in the future.”
The founders warned Mr Hunt that the collapse of SVB UK would “cripple the sector and set the ecosystem back 20 years”.
“Many businesses will be sent into involuntary liquidation overnight,” they wrote.
Sky News revealed this week that Ms Platts, who has worked in the lender’s British operations since 2007, would remain in her job following talks with Ian Stuart, the HSBC UK chief executive.
SVB UK’s independent directors, who include chairman Darren Pope, are also expected to stay on under HSBC’s ownership.
That indicates HSBC’s intention to enable the technology-focused lender to operate with some degree of autonomy on an ongoing basis.
However, the Silicon Valley Bank brand may disappear in the UK, depending upon its fate in the US, one insider said.
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The turmoil at SVB has threatened to escalate into a much broader banking crisis, with the Financial Times reporting on Friday evening that UBS is in talks to take over part or all of its Zurich-based peer, Credit Suisse.
In the US, a group of large lenders including Bank of American and JP Morgan provided a $30bn deposit lifeline to First Republic on Thursday.
However, its shares continued to slump on Friday, raising renewed fears for its health.
A spokesman for SVB UK declined to comment on the bonus payments handed out this week.
