ALEX BRUMMER: HSBC boss Quinn backs UK’s tech future

HSBC’s emergence as a white knight in the rescue of Silicon Valley Bank’s UK branch should be a major confidence booster.

HSBC CEO Noel Quinn is fighting a rearguard action to keep the big Asian bank together despite continued criticism from its biggest investor, China-based insurer Ping An.

Quinn is keeping critics at bay by shedding underperforming businesses in Canada and Europe, cutting costs and focusing on Asia.

Banking turbulence often presents an opportunity. On a different scale, Barclays, led by Bob Diamond, bought the US branch of Lehman Brothers from Chapter 11 for $250m (£208m) in 2008, making it the only European financial conglomerate with a rival investment bank.

Lloyds resurfaced (less successfully) on HBOS in 2008 with government encouragement. It got what it wanted with access to Halifax’s market-leading mortgage book.

By the standards of these other deals, HSBC’s purchase of SVB is a curse. Nevertheless, his willingness to step in and make savers and borrowers sane will improve his reputation in Whitehall and with the public.

It demonstrates HSBC’s commitment to the UK’s tech future and also gives it access to a bank with a book value of £1.4bn, several thousand high-tech companies and the important venture capital industry.

There is a risk that HSBC’s bureaucracy and compliance brigade will fail to understand the various financing models of the technology sector, where future revenues are written off years before they are withdrawn, crushing the entrepreneurial spirit.

There is inevitable booing from the sidelines from new UK lenders like Bank of London, who felt the SVB’s bankruptcy was an opportunity for them to expand their footprint and provide more challenging opposition to the Big Four.

Maybe. But in one of the periodic periods of volatility in global banking, safety is always the priority.

Britain’s fintech and challenger banks will have a tough job in the coming days and weeks, putting out fires to reassure depositors and borrowers that they have provided enough funds to weather the storms.

Doubling the risk doesn’t seem very sensible.

Think small

Tradition dictates that on the Sunday before the Spring Budget, we would see most of the Chancellor as orchestrated CCTV footage of him putting the finishing touches to his speech.

It was another build-up for Jeremy Hunt, with the Treasury spending much of the weekend working with the Bank of England to find a way to bail out SVB’s UK arm without risking taxpayers’ money.

That hasn’t happened yet. But given the intervention of the US Treasury Department and the Federal Reserve, and Governor Andrew Bailey’s track record of bolstering stability at the start of the lockdown in March 2020 and during last year’s Trussonomics-induced pension crisis, it could be just around the corner.

The last thing the chancellor and the bank want is an accumulation of failures in the challenger banking sector, which could hinder fintech and innovation.

Ever since he outlined his vision to make the UK the next Silicon Valley, Hunt has been focused on unlocking funding in Britain’s £10bn pension sector and supporting innovation.

There are indications that tomorrow’s budget will revolve around small and medium-sized enterprises that are the backbone of the UK economy.

General tax rates will be kept low at 19 percent, new, more generous investment deductions will be approved, and some R&D tax breaks will be reinstated.

The Treasury revealed last night that the Chancellor also intends to put an £80 million pot into strengthening 12 investment zones. Every little bit (and it’s not a lot) helps.

Ethnic elevator

Here’s a potentially uplifting tweet from the country’s self-proclaimed human rights lawyer Gary Lineker.

The Parker Review, led by former Sainsbury’s boss David Tyler, reports that 96 FTSE companies now have at least one ethnic minority director and 49 have two.

Among FTSE 250 companies, the number has jumped to 67 percent, up from 55 percent in 2021. Tyler is now asking the FTSE 350 to include minorities in succession planning and set five-year goals for progress.

It is also looking for the top 50 private companies to begin appointing at least one immigrant director.

The face of British business is changing for the better.