Treasury Committee holds hearing on SVB collapse

Andrew Bailey, Governor of the Bank of England, spoke at the hearing hearing on SVB, stating its collapse was the fastest he’d seen since Barings Bank failed in the 1990s following a rouge trading incident in Singapore.

“In my experience, which goes back 30 years now, it’s probably … the fastest passage from sort of health to death, really, since Barings, actually,” Bailey said.

Bailey went on to warn the committee that the Bank was in a period of “Very heightened, frankly, tension and alertness.”

Deputy BoE Governor Dave Ramsden agreed on the need for vigilance, saying: “We’ll keep a close eye on bank funding costs, what the consequences of those could be for households and businesses, equally looking out for other risk factors, we have to remain incredibly vigilant.”

Bailey insisted that despite the turmoil in the sector, the UK banking sector was in a strong position.

Regarding the sale of SVB UK to HSBC, Bailey said that there had been several offers for SVB UK during the weekend, but it took until 4am on Monday 13th to know that a sale to HSBC would go ahead – just three hours before it was announced.

Bailey went on to insist that the UK would not follow Switzerland’s move of wiping out holders of AT1 bonds before shareholders, such as what occurred in the rescue of Credit Suisse.