www.youtube.com/murdikar007 HSBC Bank Shutting Down Private Banking Business in India.
HSBC to wind up private banking business in India
British bank HSBC on Friday said that it will 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.
An HSBC spokesperson said the bank's private banking business will be closed down by the first quarter of 2016 and some of its private banking clients will be moved to its premier banking division. "We will work closely with our clients to minimise the impact of this decision on them, offering them the choice to move to HSBC Premier, our global banking and wealth management proposition, wherever appropriate," the spokesperson said.
HSBC did not give any reasons for its decision, but banking executives within and outside the bank said the move is a direct fallout of the information leak by former HSBC staffer Herve Falciani in 2008 which included names of 1,195 Indians who had evaded taxes in the country to stash it in the bank's Swiss branches. The names of the 1,195 Indians were released by the International Consortium of Investigative Journalists in February.
Meanwhile, on Friday, Falciani was found guilty of violating banking secrecy laws. He was given a five-year prison sentence by a Swiss court. Falciani, a French citizen, stayed out of Switzerland during the trial and it is unlikely he will serve time in a Swiss prison, because France doesn't extradite its own citizens.
"In view of the tax evasion inquiry, HSBC's private banking compliance was enhanced, as a result of which it became impossible for them to do business with these very demanding high net worth clients," said an executive from the bank.
HSBC did not say whether the closure of its private banking business in India would lead to job losses. However, executives at rival private banks said they expect the British lender to lose both staff and clients.
"There are about 70 people in the business here. Some of them will move out and likely take their clients with them. We are already exploring what opportunities it holds for us," said a private banking executive from a rival bank.
HSBC was among the top ten wealth managers in the country, with about 1,000 clients and assets under management of about $2-2.5 billion. Private banking business services high net worth individuals who have a minimum of $1 million to invest.
In contrast the minimum cut-off for Premier Banking is just Rs 25 lakh. Bankers said high net worth clients would prefer to shift their portfolio to other banks rather than continue with HSBC.