FTSE 100 Live March 13: HSBC on SVB bailout, BoE says deposits safe

Heathrow’s Terminal 5 has its busiest day in February since the pandemic

Heathrow Airport today said over 5 million passengers used London’s main airport in February, with Terminal 5 having its busiest day since Christmas 2019, before Covid struck.

On the 26th of the month, over 94,000 passengers used Terminal 5.

The top destinations for half-year holidays were Dubai, New York and Madrid. Departure punctuality was “as consistent as it has been in the past 12 months,” Heathrow said, with 98% of travelers clearing security in under 10 minutes.

Heathrow CEO John Holland-Kaye said: “This should give everyone confidence that we are prepared for a successful Easter holiday.”

FTSE 100 set for stable launch after SVB rescue

The FTSE 100 index fell 1.7% on Friday as sentiment towards bank stocks took a hit on developments at Silicon Valley Bank.

IG points to a flat start for the FTSE 100 this morning, with US markets also poised for stronger performance after authorities on both sides of the Atlantic stepped in to support clients of the tech-focused lender.

Analysts at Liberum said this morning: “Perhaps the most important takeaway from events at Silicon Valley Bank is that the risks of tighter monetary policy and slowing economic growth are beginning to emerge. Inappropriately dressed swimmers will be uncovered at low tide.

“For banks, the key takeaway is profitability risk as net interest margins are squeezed by increased competition for deposits.”

Direct Line swings into red territory for ‘tough year’ 2022 for FTSE 100 insurer

Direct Line has branded 2022 a “tough year” as rising claims costs in its motor insurance arm resulted in a pre-tax loss of £45.1m compared with a profit of £446m the previous year.

John Greenwood, acting CEO of the FTSE 100 company, called the performance “disappointing” and added: “2022 has been a tough year… Conditions in the auto and home markets have been challenging, with high claims inflation and regulatory reform providing significant headwinds generated for the business and we have not met these challenges as effectively as we would have liked.

“Exceptional weather and challenging investment markets also significantly impacted our results.”

The Croydon-based company warned that higher-than-expected claims in the motor business will continue in 2023 as capacity constraints in the repair industry left the outlook for claims inflation “uncertain”.

HSBC says SVB deal makes ‘excellent strategic sense’

HSBC will pay a £1 token for Silicon Valley Bank UK in a deal that will take on around £5.5 billion in loans and £6.7 billion in deposits.

Chief Executive Noel Quinn said SVB UK customers will be able to bank as usual.

He added: “This acquisition makes a lot of strategic sense for our UK business.

“It strengthens our commercial banking franchise and enhances our ability to serve innovative and fast-growing businesses, including in technology and life sciences, in the UK and internationally.”

Last year, the UK arm of collapsed US tech lender Silicon Valley Bank posted a £88million profit.

HSBC steps in to buy Silicon Valley Bank UK

The Bank of England has sold Silicon Valley Bank’s UK subsidiary to HSBC, it confirmed this morning.

In a statement, the bank said: “This measure was taken to stabilize SVBUK, ensure continuity of banking services, minimize disruption to the UK tech sector and boost confidence in the financial system.”

All depositors’ money at SVBUK is safe and secure as a result of this transaction. SVBUK’s business will continue to be operated normally by SVBUK. All services will continue to operate as usual and customers should not notice any changes.

“SVBUK staff will remain employed by SVBUK and SVBUK will continue to be a PRA/FCA authorized bank.”

It added: “No other UK banks are directly materially affected by these measures or by the resolution of SVBUK’s US parent bank. The broader UK banking system remains safe, sound and well capitalised.”

Bank of London confirms bid to bail out Silicon Valley Bank UK

The Bank of London has confirmed it has submitted a bid to bail out Silicon Valley Bank UK after it collapsed this week.

But it’s likely to face competition, especially as the Standard believes the government is eyeing Barclays to take over the failed bank’s UK unit. According to the Financial Times, the government has also received interest from a potential Middle Eastern buyer.

Established in 2021, the Bank of London is a clearing bank that holds all of its deposits with the Bank of England. CFO Gavin Hewitt previously worked at SVB UK.

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