The UK government’s greenlighting of a rescue deal to sell the UK arm of Silicon Valley Bank to HSBC was the wrong decision for the country’s startup industry, according to Rishi Khosla, CEO of OakNorth Bank.
Khosla — whose $2.4bn neobank was one of the rival parties bidding for SVB UK in a chaotic weekend-long rescue deal in March this year — also revealed that OakNorth bid “100 times more” than HSBC, but still lost out.
SVB UK was sold to HSBC for £1, so that makes OakNorth’s bid £100. SVB UK had been valued at £1.4bn prior to the startup bank run that put it on the brink of insolvency almost overnight in March. Its £6.7bn of deposits and £5.5bn loan book paled in comparison to HSBC’s $3tn global balance sheet.
“It was the right decision on a very short-term basis, i.e., that day, week or month. But anything beyond that, it was the wrong decision,” Khosla tells Sifted in an interview.
“HSBC is such a large bank, they have their swim lanes. If you fit in a swim lane, great. But if you don’t, you’re out — because that’s just the size of the business. Thus, I don’t think HSBC is going to be as committed to the high growth segment as we would be.”
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