Silicon Valley Bank’s U.K. subsidiary reportedly handed over $18 million in bonuses days after HSBC Holdings Plc (NYSE:HSBC) was roped in as part of a rescue deal to save the institution from insolvency.
Payouts to staff, which included senior executives, were given earlier last week by HSBC, SVB U.K.’s new owner, Sky News reported on Saturday. The bonuses would not have been paid out had SVB U.K. not been acquired while still solvent.
Sources told Sky News that the bonus pool was described as “modest,” ranging from $18 million to $24 million.
“HSBC has honored these previously agreed payments to retain talent and demonstrate its confidence in the bank,” Reuters quoted a spokesperson for HSBC.
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Bonuses were also reportedly paid to SVB’s U.S. staff just hours before the Santa Clara-based bank collapsed earlier this month.
SVB failed to secure funding that would have allowed the bank to continue operating. The bank’s collapse came shortly after SVB revealed a $1.8 billion loss on sales of its bonds.
Former Treasury Secretary Lawrence Summers reportedly said that SVB committed one of the most basic errors in banking, borrowing short-term funds to invest in long-tenor assets.
SVB Financial Group has now filed for Chapter 11 bankruptcy protection, as it seeks buyers for its other assets.
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