SVB’s New Owner Sues HSBC for Poaching Key Bankers
2 min read
23 May 2023, 06:09 PM IST
First Citizens wants more than $1 billion in damages from the British lender over the talent raid
PremiumThe plan was allegedly dubbed “Project Colony."
At around 9 p.m. on Easter Sunday, dozens of top bankers from the recently failed Silicon Valley Bank pressed send on an email to their new employer, First Citizens BancShares, announcing their resignation, according to a new lawsuit.
Without delay, the bankers were all hired by HSBC Holdings, the lawsuit says.
First Citizens says the mass resignation was part of a broad plan by HSBC and a former top SVB banker to steal a hugely profitable business that First Citizens had acquired through its late-March purchase of SVB. Much of the business came from SVB’s life-sciences and technology-banking team, the lawsuit alleges.
First Citizens said it would buy most of what was left of Silicon Valley Bank in late March. It acquired billions in SVB’s deposits and loans, and hoped to leverage SVB’s established relationships with businesses in technology and other areas to expand its footprint.
In a lawsuit filed Monday in U.S. District Court in northern California, First Citizens sued HSBC for more than $1 billion, alleging an illegal “scheme to plunder" one of SVB’s core businesses that it says rightly belonged to First Citizens.
An HSBC spokeswoman declined to comment Tuesday.
The lawsuit says HSBC’s plan stemmed from the British banking giant’s purchase of the U.K. arm of SVB on March 13 for just over $1. SVB had just collapsed, stoking a banking crisis that would roil markets on both sides of the Atlantic.
Days later, HSBC hired David Sabow, a former senior executive at SVB, the lawsuit says. According to the lawsuit, Sabow devised a plan to recruit more than three dozen top bankers from the collapsed SVB to HSBC. Sabow told HSBC it could earn well over $1 billion in profits within five years if the plan worked, the lawsuit says.
Through HSBC, Sabow didn’t respond to a request for comment.
Two weeks later, on March 27, First Citizens, a big regional lender based in North Carolina, bought large pieces of SVB. Then, on April 9, Easter Sunday, 42 employees resigned from First Citizens within 30 minutes, and were immediately hired by HSBC, the lawsuit says. Sabow had recruited and arranged to make offers to the bankers as part of a plan that he called “Project Colony," the lawsuit says.
The lawsuit also accuses Sabow and other former SVB bankers of stealing proprietary information that belonged to First Citizens.
“Defendants’ theft and misuse of confidential, proprietary and trade secret information, disruption of First Citizens’ business operations, unfair competition and unlawful conduct are reprehensible and demand a substantial award," the lawsuit says.
Write to Josh Mitchell at joshua.mitchell@wsj.com
