N o one in the Treasury had expected March to be easy. Last Monday’s economics-heavy review of defence and foreign policy, and last Wednesday’s budget, meant that a tough week for its mandarins was already priced in.
But none of them had expected to have to sell a bank for £1.That happened in the early hours of Monday, when Treasury and central bank officials eventually brokered a deal for HSBC to buy the UK arm of Silicon Valley Bank (SVB UK)for a nominal fee – following the collapse of SVB’s California parent when a disastrous investment strategy unravelled.After a frantic weekend spent trying to salvage the bank, on which much of Britain’s tech sector depended for cashflow, they then had to finish Jeremy Hunt’s maiden budget.However, the rescue turned out to just be the “warmup act in some ways”, according to a senior Whitehall official.
What followed was days of near-constant communication with the Bank of England in order to avoid a re-run of the 2008 banking crisis, as confidence faltered in Switzerland’s second-largest lender, Credit Suisse.“There was much more concern about Credit Suisse and the aftermath of Silicon Valley Bank’s collapse this week than the budget,” the official said. “There have been a couple of discreet naps between calls at 1am and 3am in the conference rooms.
Life, rightly, got cancelled.”Monday’s deal only provided a respite before a week from hell began to unfold. Europe’s Stoxx bank index, which measures the movements in major banking stocks on the continent, fell 5% at the start of trading on Monday, and London’s blue-chip index also fell into the red.“The fact that the US bank [SVB] had some difficulties meant that people started looking around and asking ‘What are the other weak pointsRead more on theguardian.com