Amendments of the Law (Resolution of Silicon Valley Bank UK Limited) Order 2023

Hilary Benn Excerpts

Monday 27th March 2023 General Committees

[Andrew Griffith]

I thank my right hon. Friend for his question. Primacy for financial stability sits within the Bank of England and the Financial Policy Committee. All I can say is that the Governor of the Bank of England has confirmed that, in his view, the UK banking system remains

“safe, sound and well capitalised”.

I hope that my right hon. Friend understands that it would not be right for me to step outside those words.

[Hilary Benn (Leeds Central) (Lab)]

The Minister said a moment ago that HSBC has to date provided some £2 billion to SVB to enable it to service its customers. Are such sums reported regularly to the Bank of England and regulators? Does he anticipate that HSBC will need to transfer further sums to continue to support depositors?

[Andrew Griffith]

Colleagues should know that I have nearly concluded my initial comments, if they want to intervene.

The truth is that I do not know whether such sums are reported regularly. Within the financial regulation system, the PRA has strong oversight, often with quite intrusive reporting requirements. I will write to the right hon. Gentleman about the ongoing nature of reporting. It is public knowledge that the bank had suffered withdrawals in the days immediately running up to the action we took, so clearly the money’s purpose was, in effect, to replenish it so that the money was in funds for all the bank’s clients.

The second statutory instrument that we will lay in due course will allow SVB UK to remain exempt from the ringfencing rules beyond the four-year transition period, subject to certain conditions—in effect, to make that permanent. That second exemption is not required immediately, and it will not be subject to the made affirmative procedure, but the House will have an opportunity to debate it after it has been introduced. The exemption was deemed critical to the success of the sale as it ensured that SVB UK could remain a commercially viable, stand-alone business, serving its clients within the HSBC group.

There was a clear determination that the measures were crucial to facilitating the purchase of SVB UK by HSBC—not just by the Government, but by the Bank of England. The UK has a world-leading tech sector, with a dynamic start-up and scale-up ecosystem, and the Government were pleased that a private sector purchaser was found. I therefore hope that right hon. and hon. Members will join me in supporting the legislation.