Financial services company HSBC Holdings announced on Monday that its ring-fenced subsidiary in the United Kingdom is acquiring the UK arm of Silicon Valley Bank for 1 pound sterling (Rs 99.20), Moneycontrol reported.

A subsidiary is said to be ring-fenced when its assets or profits are financially separated from the parent company even if it is not operated as a separate entity.

UK Finance Minister Jeremy Hunt said that his government and the Bank of England have facilitated the sale to the subsidiary, HSBC UK Bank.

On March 10, the California Department of Financial Protection and Innovation in the United States had decided to shut down the Silicon Valley Bank – the largest lender to fail since the 2008 global economic crisis.

The California state banking regulator took control of the bank two days after it announced a loss of nearly $1.8 billion (over Rs 14,500 crore) from a sale of investments on March 8. The announcement created panic among customers of the bank, triggering a withdrawal of $42 billion (over Rs 3.4 lakh crore) in deposits, the California Department of Financial Protection and Innovation said in its order.

The acquisition of the UK arm of the Silicon Valley Bank by HSBC will help secure deposits worth 6.7 billion pounds sterling (over Rs 66,438.76 crore). Silicon Valley Bank UK Limited also had loans of around 5.5 billion pounds sterling (about Rs 54,533.88 crore) as of March 10.

Noel Quinn, the chief executive officer of the HSBC Group, said that the acquisition makes excellent strategic sense for its business in the UK.

“It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally,” he said. “We welcome SVB UK’s customers to HSBC and look forward to helping them grow in the UK and around the world.”

Quinn said that customers of the Silicon Valley Bank UK can “continue to bank as usual, safe in the knowledge that their deposits are backed by the strength, safety and security of HSBC”.

The company also said that it will update its shareholders about the acquisition while announcing the results of its first quarter on May 2.