HSBC strikes over a billion dollars in profit from Silicon Valley Bank's collapse

HSBC gained $1.5bn boost (₹1226.16 Crore) from the purchase of the UK business of collapsed Silicon Valley Bank (SVB UK), the London-headquartered banking giant, Europe's biggest, said on Tuesday.

HSBC Bank posted a pre-tax profit of $12.9bn for the first quarter of 2023, that is, for thethree months to the end of March. This pre-tax profit is over three times the amount it made during the same time last year.The profit included a "provisional gain of $1.5bn on the acquisition of Silicon Valley Bank UK Limited," the bank said.

In March 2023, the HSBC bought SVB UK for a nominal £1 ($1.25) price, in a deal led by the government and the Bank of England.

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"We remain focused on continuing to improve our performance and maintaining tight cost discipline, but we also saw an opportunity to invest in SVB UK to accelerate our growth plans," group chief executive Noel Quinn said.

The bank also reportedly got a boost after it scrapped its plan to write-off $2.1billion due to the sale of its French business. This is because it is now widely held that thedeal may no longer be completed.

HSBC's proposed sell-off in Canada

The London-headquartered HSBC Bankannounced its first quarterly payout to shareholders for the first timesince 2019. The banksaid that it would buy back $2bn of its shares.

The bank also said the completion of the sale of its business in Canada is likely to be delayed.

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The proposed deal is part of bank's strategy to move away from the Western markets, which have been facing a period of slow growth.

The planned $10 billion sale, which was originally expected to be completed by the end of this year, is now likely to go through early next year.

HSBC's period of growth amidbanking crisis in the United States

HSBC's strong performance comes amid the rapidly growing number of failed banks in the United States and parts of Europe. Theglobal banking sector was thrown off the grid in Marchby the collapse of Silicon Valley Bank and Signature Bank and thebuyout of Credit Suisse.

On Monday, US regulators seized First Republic Bank and sold its assets to Wall Street giant JPMorgan Chase.

HSBC is run from its headquarters in London. The bank makes the majority of its profits in Asia with Chinese insurance giant Ping An beingits biggest shareholder.

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