Bankrupt SVB bank paid millionaire bonuses to managers shortly before going bankrupt
Bankers at the London branch of Silicon Valley Bank (SVB) were reportedly awarded tens of millions of dollars in bonuses just days after the Bank of England orchestrated a bailout package that led Europe's biggest lender, HSBC, to buy the bank branch gone bust for just £1, Sky News reported.
Sources described the bonus as "modest" and said it totaled between £15m and £20m, or €17m to €23m.
It was unclear on Saturday how much had been awarded to Erin Platts, the British bank's chief executive, or her senior colleagues.
An insider said the bonus payment was a signal of HSBC's confidence in the new branch's talent and that the buyer was keen to honor previously agreed payments to help retain key personnel. – Sky
In addition, the bonuses were allegedly distributed to US personnel hours before the collapse of the Santa Clara, California-based bank. The bank was handed over to the FDIC, while SVB Financial Group filed for Chapter 11 bankruptcy protection, seeking to find buyers for the remaining assets.
The British branch of the (former) SVB employs around 700 people. The "guided demolition" of the London branch was coordinated with UK Prime Minister Rishi Sunak, who played a key role in an emergency auction that attracted interest from several competing banks, including Bank of London and Oaknorth.
According to insiders, if HSBC had not intervened, the bonuses would not have been paid, while another insider pointed out that the shares held by executives and other employees were rendered worthless by the implosion.
"The UK's technology sector is truly a world leader and of enormous importance to the UK economy, supporting hundreds of thousands of jobs," said Chancellor Jeremy Hunt. “We have worked urgently to deliver on this promise and find a solution that gives SVB UK customers confidence.”
“This ensures that customer deposits are protected and can operate normally, without any support from taxpayers.”
Hundreds of tech entrepreneurs lobbied hard over the poor state of SVB UK over the weekend.
They warned of “an existential threat to the UK's tech sector”, adding: “The Bank of England's assessment that placing SVB into receivership would have little impact on the UK economy demonstrates a dangerous lack of understanding of the industry and the role it plays in the wider economy, both today and in the future”.
The founders warned Hunt that the failure of SVB UK would "cripple the sector and set the ecosystem back 20 years". -Sky
“If SVB UK weren't bailed out, many companies would go into involuntary liquidation overnight” according to company managers. We will never have proof of that…
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The article Bankrupt bank SVB paid millionaire bonuses to managers shortly before going bankrupt comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-fallita-banca-svb-ha-pagato-bonus-milionari-ai-manager-poco-prima-di-andare-in-bancarotta/ on Sun, 19 Mar 2023 11:00:23 +0000.