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Question
Welcomes HSBC’s acquisition of SVB UK but raises concerns about liquidity risks, market impact, reassurance on future support for tech and life sciences sectors under HSBC's ownership, and calls for a systemic review of financial stability risks due to rising interest rates.
Minister reply
Acknowledges the need for regulatory mechanisms that allowed swift action. Confirms the exemption from ring-fencing requirements will be permanent to ensure SVB UK can provide necessary services. Emphasises that despite market volatility, there is no indication of systemic risk according to the Bank of England’s Governor.
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Question
Expressed gratitude for the Minister, his colleagues and officials working over the weekend to deliver a solution. Asked if SVB's business model was treated differently due to its sector, if there were concerns about investors requiring firms to put money into SVB as a condition for investment, and whether crypto is contributing to financial instability.
Minister reply
Thanked MP for support. Emphasised that the business model of SVB in UK differed from US due to tight regulations here, no evidence that crypto banking contributed. The rapid withdrawal of deposits was the main issue.
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Question
Asked if regulators should review UK banks' assets pricing and marking to market to ensure tier 1 capital is sufficient to prevent liquidity issues from becoming insolvency risks.
Minister reply
Acknowledged the importance of speed and decisiveness. Noted that SVB's regulated balance sheet in UK was separate from US, with no forced sale losses contributing to problems. Regulators acted swiftly due to protected balance sheet.
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Question
Welcomed the intervention and asked if it provides an opportunity to attract more businesses to do their financing in the UK instead of overseas.
Minister reply
Agreed that responsiveness showed a high-quality regulated environment. The aim is to deliver Edinburgh reforms, removing unnecessary regulations while ensuring strong regulation for finance.
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Question
Commended quick action but raised concerns about increased thresholds for systemic risk regulation in US and potential risks with the exemption from ringfencing for HSBC announced today.
Minister reply
Emphasised that SVB UK was separately regulated, allowing decisive intervention. The exemption for HSBC clients is small at less than 1% of its client base, not posing inappropriate levels of risk.
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Question
Congratulated on the rescue and asked if ringfencing provided protection for SVB UK. Asked about potential risks in future.
Minister reply
Assured that SVB was a separate subsidiary with its own balance sheet, allowing decisive intervention to find a buyer quickly. Ringfencing will continue to protect the banking sector.
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Question
Asked about questions posed by Minister regarding causes of SVB's issues and cultural aspects contributing.
Minister reply
Explained that banks specialising in particular sectors is not unusual. UK regulatory structures allowed decisive action. Will learn any lessons but proud to deliver certainty for tech companies.
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Question
Asked about the health of SVB as assessed by Bank of England before weekend events.
Minister reply
Refused to answer on behalf of Bank of England, noting its independence in assessing such matters.
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Question
Welcomed the decision but asked about due diligence by HSBC during takeover and risks similar to Lloyds and HBOS situation.
Minister reply
Could not speak for HSBC's due diligence. Noted HSBC is a well-regulated global bank, with SVB UK clients being less than 1% of HSBC’s overall client base.
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Question
The MP congratulates the Minister, the Bank of England and the Treasury on their decisive action in rescuing Silicon Valley Bank UK. He asks if this is a sign that financial reforms post-2008 are failing or working, and inquires about future Edinburgh reforms.
Minister reply
Griffith confirms that past reforms enabled swift rescue actions. He states that Edinburgh reforms will maintain the UK's competitiveness while adhering to high regulatory standards without jeopardizing the financial system.
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Question
The MP questions if a systematic review of risks posed by rising interest rates should be conducted.
Minister reply
Griffith declines to comment on US policy but emphasises that the UK regulatory system ensured swift action, protecting depositors without taxpayer involvement.
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Question
The MP pays tribute to the Minister's leadership and asks if taxpayers would ever need to step in for another bank failure.
Minister reply
Griffith assures that the Government will protect customers, financial stability, and taxpayers but cannot offer guarantees about future scenarios.
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Question
The MP inquires if statements made by SVB UK constituted a breach of regulations.
Minister reply
Griffith acknowledges the importance of decisive action and highlights that all depositors have been protected, avoiding issues related to regulatory breaches.
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Question
The MP appreciates the Minister's work on banking recovery frameworks and asks about future financial services sector support.
Minister reply
Griffith confirms that regulators will continue to balance risk while supporting the financial services sector in UK investment.
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Question
The MP questions the risk assessment around SVB UK's liquidity and concentration of deposits.
Minister reply
Griffith explains that SVB UK had a separate banking licence and participated in stress tests, acknowledging that risks exist but are managed by regulators.
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Question
The MP thanks the Minister for swift action and asks about global liquidity concerns and steps to encourage new challenger banks.
Minister reply
Griffith affirms support for challenger banks, discusses banking regulation, and highlights HSBC's acquisition of SVB UK as a platform for growth.
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Question
The MP questions the system's effectiveness given Silicon Valley Bank’s rapid growth and US dependency.
Minister reply
Griffith emphasises that taking a US subsidiary into a UK business addresses US dependence concerns.
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Question
Commends the Minister and resolutions team at the Bank of England for their efforts in preventing taxpayer intervention, highlighting the importance of allowing a capitalist economy to function by recycling distressed assets.
Minister reply
Acknowledges the importance of risk and capital systems’ proficiency at recycling capital to productive uses. Stresses the priority was to seek a private sector transfer to protect taxpayers while ensuring customer safety and financial system stability.
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Question
Asks if the Minister agrees that deregulation in banking, as touted by the UK Government post-Brexit, contributed to the collapse of Silicon Valley Bank.
Minister reply
Rejects the claim, stating the Financial Services and Markets Bill is not even on the statute book. Current regulations are inherited from Brussels.
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Question
Questions if HSBC's waiver on certain ringfencing rules will apply more widely to other banks.
Minister reply
Confirms a review of ringfencing is underway, and the call for evidence aims to reform these arrangements post-2008.
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Question
Asks what guarantee there is that HSBC will replicate SVB's close understanding of tech companies' needs.
Minister reply
Notes HSBC’s desire to grow and support the sector, stressing the Government’s commitment to the UK tech and life sciences sectors.
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Question
Inquires if customers will have seamless access to their deposits post-acquisition.
Minister reply
Acknowledges potential teething issues but confirms SVB is open for business and serving clients seamlessly.
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Question
Asks if statements made by SVB about being an independent entity were incorrect or misleading.
Minister reply
Declines to comment on the veracity of statements but emphasises responsibility and good faith in business leadership.
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Question
Congratulates the Government for its actions, highlighting HSBC's importance as Europe’s largest bank regulated and headquartered in London.
Minister reply
Reiterates commitment to supporting businesses and fostering a thriving economic environment.
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Question
Questions what action is being taken to prevent credit contraction for specialist, fast-growing companies.
Minister reply
Stresses focus on capital market reforms and opening up access to trapped capital through various financial measures.
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Question
Acknowledges the impact of SVB’s failure on high-tech jobs and future jobs, asking for Government review.
Minister reply
Agrees with the necessity of such a review to understand SVB's appeal and ensure sustainable practices.
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Question
Requests further assurances regarding long-term plans for 3,500 British customers post-acquisition.
Minister reply
Reiterates Government’s commitment to steady economic management and fostering a fertile capital environment for growth.
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Question
For transparency, I draw hon. Members’ attention to my former career in the City, as per my entry in the Register of Members’ Financial Interests. I welcome the swift and decisive action by His Majesty’s Government in solving this issue and in reducing the risk of potential contagion to the wider economy. Will my hon. Friend ensure that sufficient regulatory work is taking place to stress-test the liquidity of UK banks and the Government bond markets, given the clear risk highlighted by this case and by the leverage in recent liability-driven investment cases?
Minister reply
Yes, I can give my hon. Friend and the House that commitment. We will learn lessons if there are lessons that need to be learned, but we should not look past the fact that today we have protected customers, protected the taxpayer and protected the security of the financial system. That is so important to our businesses. Many, many people will go home from work today much more confident, with the jeopardy of the weekend having been removed as a result of the decisive action that this Government have taken.