Silicon Valley Bank UK (SVB UK) has granted millions of pounds in employee bonuses, just days after it was rescued by global banking giant HSBC for just 1 British pound, according to unnamed sources.
In a March 18 Sky News report citing unnamed sources, it was reported that payouts to SVB UK staff and senior executives were signed off “earlier this week” by HSBC UK Bank — the institution which acquired SVB UK for 1 British pound ($1.22) on March 13.
It was reportedly “unclear” how much had been awarded to SVB UK’s CEO, Erin Platts, “or her senior colleagues,” however, the sources described the bonus pool as “modest” and said that it totaled “between £15m and £20m” (approximately $18.26 million and $24.35 million).
While the insiders reportedly noted that if SVB UK had “not been acquired solvently,” the bonuses wouldn’t have “been paid this week.” One insider reportedly “pointed out” that the stock held by senior executives and other employees had been “rendered worthless” by SVB UK’s near-collapse.
Another insider reportedly added that the bonus payments were “a signal of HSBC’s confidence in the talent base” at SVB UK and were to honor “previous agreed payments” in an effort to “retain key staff.”
SVB UK previously stated in a March 17 tweet that it was “delighted” to now be part of HSBC after 14 years of supporting and “growing the UK’s innovative economy.“
This comes after the Bank of England (BoE) shut down the operations of SVB UK on March 10, stating that it had a “limited presence” and no “critical functions” supporting the financial system.
The statement declared that SVB UK would “stop making payments or accepting deposits,” as the BoE intended to apply to the court to place SVB into a “bank insolvency procedure.”
Meanwhile, SVB’s United States banking arm has been taken into government ownership. Its holding company, SVB Financial Group, filed for Chapter 11 bankruptcy protection on March 17 as it seeks buyers for its other assets.
SVB Group’s chief restructuring officer, William Kosturos, stated that the Chapter 11 process will allow SVB Financial Group to “preserve value as it evaluates strategic alternatives for its prized businesses and assets.”
Kosturos emphasized that SVB Capital and SVB Securities will continue to operate, led by their respective independent teams.