MUMBAI: HSBC Holdings Plc on Friday said it will wind up one of its business units in India offering wealth management services.
“After a strategic review of our global private banking operations here, we have decided to close down the business,” said an official. The business will be shut by March, 2016 and select customers can move to HSBC Premier, its global retail banking and wealth management platform. He didn’t divulge the quantum of funds the Indian arm has been managing under its wealth management business. The announcement was first made in an internal e-mail to employees earlier in the day.
The global financial services major’s private banking division is mired in a black money probe after an investigation by ICIJ, a global journalists’ collective, which found out that over 1,000 Indians had parked over $4 billion in HSBC Geneva till 2007. However, officials were quick to dismiss any notion of the shutdown of the local private banking business being linked to the scandal and stressed that the controversy involves Indian’s accounts in HSBC Geneva. The decision to close the business is also not a fallout of any cost rationalisation measures, the official said. “This marks further progress in the HSBC group strategy to simplify business and deliver sustainable growth,” he said. About 70 people working in the division headed by Shantanu Ambedkar will be absorbed into the retail bank.
HSBC’s move comes within two months of Royal Bank of Scotland (RBS) exiting the private banking business by selling it to a company floated by a few of its senior management personnel.
Wealth management business in India is in its nascent stage but highly fragmented with brokers, sub-brokers, financial advisers, insurance and tax consultants.
As per estimates, India has the fourth-highest number of High Networth Individuals (HNIs) in the Asia-Pacific region after Japan, China and Australia. If in 2011, there are 2.5 lakh HNIs in India with a cumulative wealth of $1,083 billion, it is expected to grow by 85 per cent to reach close to 4.6 lakh individuals in 2015, while their combined wealth is set to grow 97 per cent to $2,134 billion.