According to reports, Shanghai Pudong Development Bank may acquire the China-based subsidiary of Silicon Valley Bank (SVB). Authorities in the Chinese city of Shanghai are reportedly backing the acquisition, which may help minimize the impact of SVB’s closure. In its statement after the disappearance of SVB, SPD Silicon Valley Bank reportedly said that its operations remained stable.
Shanghai authorities seek to limit the impact of SVB’s disappearance
Silicon Valley Bank’s joint venture partner Shanghai Pudong Development Bank (SPDB) plans to take over the collapsed financial institution’s China-based subsidiary, a report has said. According to the report, SPDB is likely to acquire the collapsed US bank’s 50% stake in the subsidiary.
The plan to keep the financial institution’s subsidiary running came just days after the Bank of England helped facilitate HSBC’s takeover of the collapsed bank’s UK subsidiary. British authorities have praised the £1 ($1.22) acquisition of the subsidiary, which protects depositors apparently without using taxpayers’ money.
According to a report by the South China Morning Post, Shanghai’s banking authorities may back the acquisition, which could help the city weather the storm caused by SVB’s abrupt closure. The report added that the local government and the city’s banking regulators had discussed the possibility of SPDB acquiring the subsidiary that does business as SPD Silicon Valley Bank in China.
While Shanghai banking authorities are also open to the idea of a non-Chinese entity buying the subsidiary, analysts quoted in the report said this option may not be the most ideal for clients who want a quick solution to the problem.
Meanwhile, in its statement after the spectacular collapse of SVB, SPD Silicon Valley Bank reportedly said that its operations remained stable. The subsidiary highlighted China’s banking regulations that required it to maintain an independent balance sheet separate from its parent company.
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