Silicon Valley Bank

Anthony Browne Excerpts

Monday 13th March 2023 Commons Chamber

[Andrew Griffith]

I cannot speak for the due diligence that was done for HSBC, but it has got itself comfortable with it. We should also understand the relative scale of HSBC, which is an extraordinarily well-regulated, global and diverse bank. My understanding is that if we add all of the important clients of Silicon Valley Bank UK, which we had in the front of our mind as we sought to act over the weekend—if I may say so, we make no apology for acting in haste, because haste was absolutely the required procedure in this particular case—they would in their entirety be less than 1% of the overall client base of HSBC. With respect, I do not think that was the case in the examples to which the right hon. Member referred.

[Anthony Browne (South Cambridgeshire) (Con)]

The sighs of relief across South Cambridgeshire this morning were so loud that they were almost deafening. Dozens of my technology companies, which had been in contact with me over the weekend, thought they were going to be wiped out this morning, but they can now operate as normal because of the decisive action by the Government. I very much congratulate the Minister, the Bank of England and the Treasury on that action.

I have also had questions about whether this is a sign that all the reforms of the financial system in the wake of the global financial crisis have failed or are failing. Does my hon. Friend the Minister agree that this is not a sign of the reforms failing, but a sign that they are working, and that without the reforms we would not be able to do a rescue in this way? Can he also confirm that the reforms that are coming through—the Edinburgh reforms—will not make future collapses more likely, or future rescues more difficult?

[Andrew Griffith]

My hon. Friend knows a great deal about the sector, and it is due to past reforms that we were able to take this decisive action. Parliament has given—in extremis, and with the agreement of the Bank of England, the PRA, the FCA and the Treasury—sweeping powers to enable this sort of transaction to happen at great pace. Let me be clear that it is the shareholders and creditors of the bank, not depositors or the taxpayer, who have lost. In the system that we have, that is the right outcome, and I am pleased we were able to achieve it.

The Edinburgh reforms are designed to give this country the ability to continue to grow and to be internationally competitive with other markets, while adhering to the highest quality regulatory standards, and with the UK at the absolute cornerstone of organisations such as the Financial Stability Board. They will not put any more jeopardy into the financial system. Indeed, having good healthy businesses that grow and are profitable is the best way to avoid jeopardy.