Millions paid in bonuses to UK Silicon Valley Bank staff days after £1 rescue

The UK arm of the collapsed Silicon Valley Bank is reported to have paid millions of pounds in bonuses days after it was sold in a rescue deal for £1.

Staff at Silicon Valley Bank UK (SVB UK) are said to have been given payouts from what has been described as a "modest" bonus pool of between £15m and £20m. The Californian-based bank collapsed eight days ago, triggering concerns of a new global banking crisis.

Details of the payouts emerged as crisis-hit Credit Suisse bank was locked in talks this weekend with UBS over a potential takeover. Regulators around the world are now battling to retain public confidence in the international banking system.

The bonuses to SVB UK staff were approved by its new owner, HSBC, according to Sky News, which first reported the payouts. The bank said the bonuses had been agreed before the bank's failure.

Ian Stuart, chief executive of HSBC UK, said: "We wanted this business and we wanted to retain the people who, in turn, support its customers. We have honoured these previously agreed payments to recognise their expertise and demonstrate our confidence in SVB UK."

The bank said no government or taxpayer funds were involved in the sale of SVB UK which was facilitated by the Bank of England in consultation with HM Treasury. The subsidiary employs more than 600 staff.

Hundreds of billions of pounds were wiped off the value of global shares last week after the collapse of SVB. There were heightened fears of financial contagion when regulators closed the New York-based Signature Bank last Sunday after customers started withdrawing billions of dollars.

By Tuesday, Credit Suisse, Switzerland's second largest bank, also appeared to be in peril as the bank disclosed its auditor had found "material weaknesses" in its financial reporting controls. There was a sell-off of shares after Saudi National Bank, a major shareholder, ruled out any further investment.

On Friday, Credit Suisse shares fell 8% despite securing a £45bn emergency loans from the Swiss National Bank. More than $450m (£369m) was withdrawn from Credit Suisse's US and European managed funds between 13 and 15 March, according to Morningstar Direct data.

This weekend, Credit Suisse, which is reported to employ more than 5,000 people in London, was in crunch talks with Swiss banking giant UBS and regulators over a potential merger. UBS is reported to be analysing the potential risks of a takeover.

UBS is seeking concessions over any merger, including an indemnity or government agreement to cover future legal costs, according to a source quoted by the Financial Times. Regulators are said to consider that a merger may be the only option to arrest a collapse in confidence in Credit Suisse.

An increase in borrowing costs after more than a decade of historically low interest rates has sparked concerns of another global banking crisis. It has reduced the value of long-term bonds held by banks and accelerated the rate at which clients withdraw funds, because they can no longer borrow cash from elsewhere at very low rates.