Why is HSBC shutting down its private banking business in India?
MUMBAI: Hong Kong and Shanghai Banking Corp. (HSBC) announced that it is shutting its private banking business in India. According to the spokesperson, it is closing business after reviewing the private banking operation in India. HSBC’s private banking business provides asset management services to well-off individuals.
Why is HSBC shutting shop in India?
The bank is shutting shop because it could not turn its wealth into profit. According to Bloomberg, the bank will offer private banking services to clients through their premier banking services and will transfer about 70 staff following a strategic review of the operations.
The private banking sector of HSBC is not among the top three players in India, according to sources.The company offers corporate, retail and investment banking services and has about 32,000 employees in India.
This is not the first time that the bank has shut its business. In 2013, HSBC shut its retail broking and retail depository service business down due to which around 300 employees lost their jobs.
In June 2015, Stuart Gulliver, chief executive officer, HSBC announced to shut its loss-making businesses for three years and focus on Asian economies, according to Mint. He also rolled out the plan of laying off 25,000 employees after increasing compliance costs.
Earlier, HSBC Bank was in the news due to the black money probe. The bank leaked a list of account holders who illegally stashed funds in the foreign bank to escape income tax scrutiny. The Income tax department had attached bank accounts worth Rs 2,300 crore of 20 people named in the HSBC black money list.
Two other banks shut private banking business
Just like HSBC two other banks, Royal Bank of Scotland and Morgan Stanley also sold their private banking business units.
To focus on UK retail and commercial banking, Royal Bank of Scotland sold its Indian private banking business in June to Sanctum Wealth Management (SWM), a company led by Shiv Gupta.
According to Reuters, SWM was said to take over the onshore clients and staff of RBS private banking business and retail all branch networks operated by the RBS private banking in India.
The second bank that sold its private banking arm was Morgan Stanley. In May 2013, the bank sold its private banking business to Standard Chartered.
The Standard Chartered arm in India said that the acquisition would complement their existing private banking onshore business and significantly increase their private banking AUM in India. Morgan Stanley sold its private banking arm four years after coming into business in India.
The company even launched the sale of its Indian private wealth management unit in November 2012, according to Economic Times.
