According to reports, Shanghai Pudong Development Bank may acquire Silicon Valley Bank’s (SVB) Chinese subsidiary. Authorities in Shanghai, China, reportedly support the acquisition, which may minimize the impact of SVB’s shutdown; SPD Silicon Valley Bank is reported to be in stable management, according to a statement following SVB’s closure.
Shanghai authorities try to limit the impact of SVB’s disappearance
Shanghai Pudong Development Bank (SPDB), a joint venture partner of Silicon Valley Bank, is planning to acquire the failed lender’s China-based subsidiary, according to areport. According to the report, SPDB will acquire 50% of the shares of the subsidiary held by the failed U.S. bank.
The plan to keep the financial institution’s subsidiary alive comes days after the Bank of England helped facilitate HSBC’s acquisition of the failed bank’s subsidiary in the UK. British authorities have praised the acquisition of the subsidiary for £1 ($1.22), which ostensibly protects depositors without using taxpayer funds.
The South China Morning Post reports that banking authorities in Shanghai may support the deal to weather the storm caused by SVB’s sudden closure. The report added that the local government and Shanghai banking regulators have discussed the possibility of SPDB acquiring a subsidiary operating in China as SPD Silicon Valley Bank.
Shanghai banking authorities are also open to the idea of a non-Chinese company acquiring the subsidiary, but analysts cited in the report said this option may not be the most ideal for customers who want a quick resolution to their problems.
Meanwhile, following SVB’s spectacular collapse, SPD Silicon Valley Bank reportedly said in a statement that its operations are stable. The subsidiary highlighted Chinese banking regulations that require it to maintain a separate and independent balance sheet from its parent company.
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