HSBC to end brokering, depository services in India
18 October 2013
Global banking giant HSBC Holdings plc said on Thursday announced that it would to discontinue its retail broking and depository services in India, which it was operating under its arm HSBC InvestDirect Securities (India) Ltd.
The announcement caught banking experts by surprise. ''HSBC reviewed all options available for the business before deciding on the exit. Impacted employees will be offered a fair and equitable severance pay, in line with HSBC policy, and career transition services will be extended through a professional agency,'' the bank said in a statement.
The closure will result in loss of about 300 jobs. HSBC employs about 30,000 people in India.
HSBC said it will stop opening new retail broking accounts with immediate effect. It will notify existing clients of the date of discontinuation of its retail broking and depository services and will continue to offer these till then.
HSBC InvestDirect Securities (India) is an arm of HSBC InvestDirect (India), which also offers investment advisory services and securities- related financing through other subsidiaries.
The move is part of the bank's global strategy to review and exit some businesses to cut costs.
HSBC had said it would cut 30,000 jobs across the world to save up to $3.5 billion over three years.
"This move represents further progress in the implementation of HSBC's strategy announced in May 2011," the bank said.
It said it remained committed to India and would continue to invest in its other businesses in the country - retail banking, wealth management, commercial banking, investment banking and capital markets, institutional broking, asset management and insurance services.
''India is a priority growth market for HSBC and its presence across 29 cities in the country is integral to HSBC's global network,'' the bank said.
HSBC Holdings is expected to remain a net hirer in the country this calendar year despite it exit from retail broking and depository services.
While HSBC will allow buying and selling of securities till 22 November, only selling would be entertained between 25 November and 3 December. Depository holders have been given time till 3 December to migrate to other depositories. For mutual fund holders, the last date is 18 November.
The London-based HSBC (formerly the Honkong & Shanghai Banking Corp) had acquired IL&FS Investsmart for over Rs1,000 crore in 2008 from ETRADE Mauritius and IL&FS.
Subsequently, it came out with an open offer and delisted the company from the exchanges.
Brokering houses have been facing difficulty in sustaining the business in the last few years following the collapse of Lehman Brothers in 2008.