First Citizens BancShares Inc, the acquirer of Silicon Valley Bank (SVB) after its collapse, has filed a lawsuit against HSBC Holdings PLC, alleging that HSBC unlawfully hired over 40 employees from SVB to establish its own U.S. venture banking business. 

According to First Citizens’ lawsuit, David Sabow, former leader of SVB’s technology and healthcare banking segment, orchestrated the alleged scheme to poach SVB’s business. First Citizens asserts that Sabow and his associates persuaded around 40 other SVB employees to join HSBC in April. 

The lawsuit, filed in San Francisco federal court, accuses HSBC and Sabow of bypassing the typically lengthy and costly process required for launching a commercial banking business, thanks to the use of stolen trade secrets. First Citizens is seeking damages exceeding $1 billion.

In April, HSBC announced the hiring of numerous SVB employees to assist in establishing a dedicated practice focused on serving technology and healthcare companies, as well as supporting investors.

The lawsuit alleges that HSBC breached contracts and gained an unfair competitive advantage by poaching employees with access to confidential and proprietary information from SVB, thereby acquiring knowledge of SVB’s operations.

In March, First Citizens acquired $72 billion worth of SVB assets at a discounted price of $16.5 billion following the collapse of the bank. SVB was shut down due to significant losses resulting from investor withdrawals. First Citizens has acquired over 20 failed banks since the 2008 housing crisis through mergers or purchases. First Citizens acquired SVB’s assets and deposits in March for approximately $500 million in stock following the takeover by the U.S. Federal Deposit Insurance Corporation. 

HSBC, like First Citizens, played a role in the aftermath of SVB’s failure. In April, HSBC announced the hiring of several SVB bankers to aid in establishing a dedicated banking practice focusing on technology, healthcare companies, and investors. HSBC separately acquired SVB’s UK arm for just $1.21.