SVB UK unit paid millions of pounds in bonuses

SVB UK unit paid millions of pounds in bonuses

The UK arm of the collapsed Silicon Valley Bank has been reported to have paid millions of pounds in bonuses days after it was sold in a rescue deal for 1.

Staff at the Silicon Valley Bank UK SVB UK have been given small bonuses of between 15 m and 20 m, a Californian bank collapsed eight days ago, triggering concerns of a new global banking crisis.

Details of the payouts came as Credit Suisse bank was locked in talks with UBS this weekend about a potential takeover. Regulators are trying to retain public confidence in the international banking system.

According to Sky News, the bonuses to SVB UK staff were approved by its new owner, HSBC. The bonuses were agreed before the bank's failure, according to the bank.

Ian Stuart, Chief Executive of HSBC UK, said: We wanted this business and we wanted to retain the people who support its customers. We have honoured these previously agreed payments to recognise their expertise and show our confidence in SVB UK. The Bank of England has facilitated the sale of SVB UK in consultation with HM Treasury, but there has been no government or taxpayer funds involved in the sale of SVB UK. There are more than 600 employees at the subsidiary.

Hundreds of billions of pounds were wiped out of the global shares last week after the collapse of SVB. There were heightened fears of financial contagion when regulators closed the New York-based Signature Bank last Sunday after customers started withdrawing billions of dollars.

By Tuesday, Credit Suisse, Switzerland's second largest bank, appeared to be in peril as the bank disclosed its auditor had found material weaknesses in its financial reporting controls. A major shareholder of Saudi National Bank ruled out any further investment after a sell-off of shares.

Credit Suisse shares fell 8% on Friday despite a 45 billion emergency loan from the Swiss National Bank. More than $450 m 369 m was withdrawn from Credit Suisse's US and European managed funds between March 13 and 15th, according to Morningstar Direct data.

Credit Suisse, which employs more than 5,000 people in London, is in crunch talks with Swiss banking giant UBS and regulators over a potential merger. UBS is looking at the potential risks of a takeover.

According to a source quoted by The Financial Times, the UBS is seeking concessions over any merger, including an indemnity or government agreement to cover future legal costs. A merger may be the only option to prevent a collapse in confidence in Credit Suisse, according to regulators.

After more than a decade of historically low interest rates, an increase in borrowing costs has sparked concerns of a global banking crisis. It has reduced the value of long-term bonds held by banks and accelerated the rate at which clients can no longer borrow cash from elsewhere at very low rates.