 "HSBC to shut private banking biz in India")
London-based Hong Kong and Shanghai Bank Corporation (HSBC) has decided to shut its private banking business in India by March 2016.
"After a strategic review of the global private banking operations in India, we have decided to close the business. This marks further progress in the HSBC group strategy to simplify business and deliver sustainable growth," said a bank spokesperson.
HSBC's private banking business in India employs 70 people. The bank said it would not lay off these employees and they would be given the option to move to HSBC Premier, the bank's retail banking division. Private banking customers, too, would be given the option to move to retail banking services.
HSBC provides advice to its clients in mutual funds, bonds, debentures and structured products. According to sources in the wealth management sector, the fee income from HSBC's private banking business in India was only $3-4 million (Rs 20-27 crore) and the bank had assets under management (AUM) of over $1 billion (Rs 6,676 crore).
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HSBC's global banking and markets division made a profit after tax of $195 million (Rs 1,302 crore) in the six months ended June 2015, after a 20 per cent decline from the same period last year. HSBC's overall profit before tax from India declined by 12 per cent to $335 million (Rs 2,236 crore) in the six months ended June from $380 million (Rs 2,537 crore) in the corresponding period of 2014.
Bankers said intense competition in private banking was forcing lenders to exit this segment. The Royal Bank of Scotland (RBS) decided to sell its private banking operations to Sanctum Wealth Management in September.
Earlier this month, Standard Chartered Bank, too, decided to reduce its unsecured retail and corporate business in India.
HSBC has been gradually reducing its operations in India. In 2013, it had shut down its retail broking and retail depository services in the country, which had affected 300 jobs.
In an investor presentation made in June, HSBC had listed India as the second largest priority market in Asia. It outlined that it had been systematically capturing growth in trade and capital flows in Asia. The lender had also said it would focus on the asset management and insurance business in Asia.
HSBC Bank faced controversy after an investigation by ICIJ, a global journalists' collective, had revealed that over 1,000 Indians had deposited over $4 billion in HSBC Geneva till 2007.
OPEN AND SHUT CASE
*$1 billion (Rs 6,676 crore): AUMs under private banking business
*$3-4 million (Rs 20-27 crore): Fee income from private banking business in India
70 Employee base of pvt banking business
32,000 Total employee base in India
- HSBC India's profit before tax declined by 12% to $335 million (Rs 2,236 crore) in the six months ended June 30
- HSBC India joins international lenders such as Standard Chartered Plc, Royal Bank of Scotland and Morgan Stanley in deciding to shut down some of its businesses in India
