HSBC to wind up private banking unit in India
27 November 2015
HSBC Holdings Plc, Europe's biggest lender, is shutting its private banking unit in India, following the footsteps of several foreign banks who made their exit from the cut-throat wealth management business in Asia's third-largest economy after they found it to be as paying as expected.
The rising number of millionaires in the country simply did not translate into profits for HSBC as its high-paid wealth managers failed to cash in by managing those riches.
Mumbai-based HSBC is expected to give private banking clients the choice to move to HSBC Premier, the bank's global retail banking and wealth management platform. The process is likely to be completed by the end of March 2016.
"After a strategic review of the global private banking operations in India, we have decided to close the business," an India spokesman said on Friday. "This marks further progress in the HSBC group strategy to simplify business and deliver sustainable growth."
HSBC follows several other wealth managers, both foreign and domestic, who had ramped up wealth management operations during the high-growth period, hoping to take advantage of the robust economic growth, only to find themselves struggling when growth tapered and savings got squeezed.
Other foreign banks such as Royal Bank of Scotland and Morgan Stanley have already sold their onshore India private banking units in the recent past, as part of a global business restructuring.
Private banking, however, is not big business for HSBC in India, which has about 70 of its 32,000 Indian employees engaged in it.
"This marks further progress in the HSBC group strategy to simplify business and deliver sustainable growth," an HSBC spokesperson in India said.
HSBC's private banking business provides long-term wealth management services, including lending and investment management to complex wealth structuring, besides providing investment advisory on mutual funds, bonds, debentures and structured products as also non-discretionary investment advisory services.