HSBC buys Silicon Valley Bank UK

A drop in HSBC’s share price following news of the Silicon Valley bank’s purchase of its UK subsidiary for £1 ($1.21) was “driven by profit-taking, not fundamental weakness,” UBS analysts said in a note.

HSBC confirmed the acquisition, excluding the assets and liabilities of SVB UK’s parent company, Silicon Valley Bank.

“We think the 9% decline in stocks since Wednesday is profit-taking and the sector cycle means no change in outlook: deposit competition increases the value of the best deposit holders,” UBS said.

“We see room for unanticipated value creation through volumes, cost reductions (US, UK) and possible disposals.”

In the broader banking sector, the SVB crisis could lead to more liquidity regulation for banks, investor preference for larger banks over smaller banks and more competition for retail-focused banks and deposits over business-focused banks, analysts said. 2024-25 to reduce net interest limits.

April LaRusse, head of investment specialists at Insight Investment, says there is still “very, very high” inflation.

Patrick Armstrong, chief investment officer at Plurimi Wealth LLP, discusses the latest on the SVB fallout and where the Fed and investors can go from here.

Russ Mold, investment director at AJ Bell, weighs in on the unwinding of a Silicon Valley bank.

British bank HSBC will acquire Silicon Valley Bank UK Limited, according to a Bank of England statement.

The Bank of England said the move was “to stabilize SVBUK, ensure the continuity of banking services, minimize disruption to the UK technology sector and support confidence in the financial system”.

Silicon Valley Bank surprised investors Wednesday by raising $2.25 billion to shore up its balance sheet and selling all of its securities at a loss of $1.8 billion.

The bank was shut down by regulators after customers withdrew $42 billion in deposits by the end of Thursday.

HSBC said it would buy SVBUK for £1.

— Hannah Ward-Glenton and Matt Rosoff contributed to this report.

Shares of the UK-based technology company, which designs custom chips and semiconductors, are expected to rise more than 50% over the next 12 months, according to Barclays Equity Research.

The investment bank said the fast-growing data center space is “expanding sales and profit growth faster than any other company in our coverage.”

CNBC Pro subscribers can read more about semiconductor stocks.

– Ganesh Rao

Silicon Valley Bank went under on Friday, and investor Leon Cooperman thinks the situation is a byproduct of low interest rates from the Federal Reserve.

“This is the result of a decade of stupid monetary policy of zero to negative rates,” Cooperman, president of Omega Advisors, told CNBC’s Scott Wapner.

The central bank cut rates to zero to stabilize the economy after the 2008 financial crisis. Rates remained low for years until the Fed began raising them in the late 2010s. However, in 2020, the central bank brought rates back to zero as Covid-19 spread across the globe.

Over the past year, the central bank has been raising rates to curb inflationary pressures.

– Fred Imbert

Citi said the world is undergoing “rapid and transformative change” when it comes to energy, naming four buy-rated stocks as “top picks” in the space.

CNBC Pro subscribers can read more here.

– Weissen Don

Regulators scrambled to avoid a banking crisis over the weekend, with a key objective of “strengthening public confidence” in the US banking system.

A joint statement from Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and FDIC Chairman Martin Grunberg said depositors at Silicon Valley Bank and New York Signature Bank could have access to their money as soon as Monday.

“Any loss associated with Silicon Valley Bank’s resolution will not be borne by taxpayers,” they said.

– Christina Seder Berg

Futures extended their gains as early as 6:30 p.m. ET after U.S. regulators unveiled a plan to limit damage from the collapse of Silicon Valley banks.

Dow futures were last up 297 points, or 0.9%. S&P 500 futures rose 1.1% and Nasdaq Composite futures advanced 1.2%.

– Tanaya Machel

European markets Silicon Valley opened higher on Monday as investors watched the fallout from the banking crisis.

UK’s FTSE 100 index is expected to rise 10 points to 7,745, Germany’s DAX is expected to rise 82 points to 15,477, France’s CAC is up 26 points to 7,228 and Italy’s FTSE MIB is expected to rise 21 points to 27,312.

Income comes from direct taxes and there are no big data releases.

– Holly Elliott