HSBC India to shut down its private banking business

Banks, including RBS and Morgan Stanley, recently sold their onshore India private banking units as part of their global business restructuring. The bank will continue to invest in HSBC Premier to enhance the range of products and services offered to its customers.

HSBC confirmed in an e-mailed statement it made a decision to shut the global private banking operations in India and will offer clients the choice to move to its Premier business where appropriate.

This scripts additional growth in the HSBC group strategy to streamline business and deliver viable growth.

It is not immediately known how much funds the bank has been managing under its wealth management business.

The global bank’s private banking division has been at the centre of a black money probe after an investigation by ICIJ, a global journalists’ collective, found out that more than 1,000 Indians had parked around $4 billion in HSBC Geneva till 2007.

However, bank officials were quick to dismiss any notion of this shutdown being attributed to the scandal and stressed that the controversy involves Indians’ accounts in HSBC Geneva.

HSBC is closing its private banking arm in India, where the increasing number of wealthy individuals has led to intense competition for their business. The spokesperson also denied that this was a cost-cutting measure by the bank, saying HSBC will retain all its 32,000 employees in India now and India will remain a “priority” market for HSBC.

Many foreign wealth managers entered India in recent years lured by its long-term growth prospects.

The unit posted pre-tax profit of $7 million for the first half of the year, while the retail banking and wealth management arm reported a $3 million loss.

Several foreign wealth managers have paved their way quickly into India and expanded their operations.

Headquartered in the UK, HSBC is said to be the world’s fourth largest bank by total assets, with total assets of US$2.67 trillion.