HSBC winds up private banking business in India
Dated: November 30, 2015
British bank HSBC has announced to shut down its private banking business in India, an announcement that came amid an ongoing investigation by India's tax department against individuals who had unaccounted foreign currency accounts in the bank's Swiss branch.
Many foreign wealth managers scrambled to open up shop in India a few years ago lured by its long-term growth prospects. Even though India has been minting millionaires at a strong pace, it has failed to translate into profits for the foreign wealth managers that have set up teams of well-paid bankers to help manage those riches.
The bank employs about 32,000 people - many of them in its back-office outsourcing unit - in India, where it also offers corporate, retail and investment banking services.
The value of assets managed by HSBC's private banking unit in India was not immediately clear, but wealth management industry sources said the bank was not one of the top three players in the segment.
The bank posted pre-tax profit of $7 million in its India private banking business in the six months to June, accounting for 4.5 percent of the Asia private banking business and up from $5 million in the same period a year ago. HSBC, Europe's biggest lender, did not immediately respond to a Reuters request for comment on its private banking staff in India and its market position. HSBC private banking in India lacked scale and closing it ties in with a review the bank is undertaking of operations around the world - selling or closing units where it lacks scale or the businesses are unprofitable, people familiar with the move said.
HSBC's decision to exit India private banking business comes at a time when India's homegrown wealth managers are hiring more staff and expanding in smaller cities, seeking to attract rising numbers of new millionaires.