Sunday, Jun 30, 2013
Dubai: HSBC, the largest bank by market capitalisation in Europe, on Sunday confirmed it is currently reviewing the portfolio of SME (small and medium enterprise) customers and will be closing the accounts of some companies in the UAE in order to streamline its operations and increase capital returns.
The news came several weeks after the bank announced that it would shed 14,000 workers worldwide to save about $3 billion (Dh11.02 billion) in annual costs.
The bank, however, refused to disclose the number of business banking accounts that would be affected and what specific minimum capital requirements are being followed. The bank also would not confirm if the move is only targeted at SMEs.
“HSBC has been conducting a review of all its businesses since May 2011 to meet its goal of streamlining the business and improving the return on capital. As part of this, the bank is reviewing its portfolio of small business customers in the UAE. As a result, HSBC will be closing some of its business banking accounts,” a spokesperson told Gulf News.
The goal of the review is to identify small businesses that “operate across borders, or intend to in the near future.” “Because international business is at the heart of HSBC’s strategy, these are the customers whose needs it is best-placed to address,” he added.
60 days’ notice
The bank said it understands that the recent decision will inconvenience some of its customers. “But we are giving 60 days’ notice and will try to help where we can.”
Neutral Group, one of the companies who received the notice dated June 2, questioned the bank’s decision, citing that its business is a “profitable and growing SME, with turnover in excess of $1 million in UAE.” The company said it is a business customer with the bank, with its subsidiaries in the UK, UAE and Australia all holding HSBC bank accounts.
“We have never done anything to warrant having our account cancelled,” Karl Feilder, CEO and chairman of the Neutral Group, wrote in an email forwarded to Gulf News. Feilder also questioned whether the bank is pulling out of SME banking in the UAE.
The bank said it remains strongly committed to the SME sector in the UAE. In 2010, HSBC launched its SME initiative with a $100 million fund to help small businesses. A similar amount was announced a year later and in 2012, the bank increased the fund to Dh1 billion.
“HSBC business banking has been focused on helping SMEs grow and trade internationally for almost 150 years globally and for over 60 years in the UAE. As such, international business remains a key competitive strength that lies at the heart of our strategy, and we now aim to devote more resource to those customers we are best placed to help,” the bank said in its closure notice.
By Cleofe Maceda Senior Reporter
Gulf News 2013. All rights reserved.
