Bankers from Silicon Valley Bank’s London branches have reportedly been paid bonuses worth tens of millions of dollars in just days, Sky News reported. “Sources described the bonus pool as “modest”, and said it totalled between £15m and £20m,” writes Sky News. “It was unclear on Saturday how much had been awarded to Erin Platts, the UK bank’s chief executive or her senior colleagues.”
It added: “One insider said the bonus payments were a signal of HSBC’s confidence in the talent base at its new subsidiary and that the buyer had been keen to honour previously agreed payments in order to help retain key staff.”
The bonuses came after the Bank of England orchestrated its bailout, which saw HSBC, the biggest lender in Europe, purchase failing banks shares for a mere 1 British pound.
Sources described the bonus pot as “modest” and said it was worth around PS15m to PS20m.
It was not clear Saturday how much had been awarded to UK Chief Executive, Eileen Pratts, or to her top colleagues. One insider said that the payment of bonuses was a sign that HSBC had faith in the talent base of its new subsidiaries, and that the takeover firm was eager to meet payments it had already agreed in an effort to help keep key employees.
More importantly, bonuses were allegedly paid out to U.S. employees hours before the collapse at the Santa Clara, Calif.-based bank.
The bank was placed in FDIC custody, and parent SVB Financial Group filed for Chapter 11 bankruptcy protection while trying to find buyers for its remaining assets.
The (former) UK division of SVB employed about 700 people. The London branch’s guided dismantling was coordinated with British prime minister Rishi Sunak, who played a key role in an emergency auction which attracted the interest of several rival banks, including Bank of London and Oaknorth.
If HSBC had not taken action, bonuses would not have been paid, according to one insider, while another pointed to shares held by top executives and other staff being rendered useless amid the collapse.
Chancellor Jeremy Hunt said that the UKs technology sector is truly leading the world, and is of immense value to the British economy, supporting hundreds of thousands of jobs.
“We have worked to ensure we live up to this commitment, and to come up with a solution that gives customers at SVB UK certainty.”
The Government was heavily pressured by hundreds of technology entrepreneurs over the past weekend over the sorry state of SVB UK.
They warned about an “existential threat to Britain’s technology sector.”
The bank added: : “The Bank of England’s assessment that SVB going into administration would have limited impact on the UK economy displays a dangerous lack of understanding of the sector and the role it plays in the wider economy, both today and in the future.”
“The Bank of Englands assessment that the emergence of an SVB in administration will have limited effects on the British economy shows a dangerous lack of understanding of the industry and the role it plays in the wider economy, both today and into the future.”
The founders warned Mr Hunt that a SVB UK collapse would “cripple the industry and set back the ecosystem by up to 20 years.”
The entrepreneurs wrote: “Many businesses will go into involuntary liquidation overnight” if SVB UK is not saved.
The founders warned Mr Hunt that the collapse of SVB UK would “cripple the sector and set the ecosystem back 20 years.”
