HSBC cuts back on SME lending in UAE

Thursday, 27 June 2013 9:42 AM

HSBC is cutting back on some of its SME banking services in the UAE following a two-year internal review, the lender confirmed.

In a letter to a number of its small business customers, HSBC said account holders had 60 days to find a new bank as it sought to refocus its operations on larger, international customers.

“International business remains a key competitive strength that lies at the heart of our strategy, and we now aim to devote more resources to those customers we are best placed to help,” the letter read.

One business customer, who preferred to stay anonymous, told Arabian Business that they held accounts with HSBC in three separate countries and turned over in excess of $1m per year in the UAE alone. They said the notice of closure had been received “out of the blue”.

"While it is understandable that HSBC, like any business, has to focus on the customers that generate the most income for the bank, the way this has been handled is unbelievably bad,” they said. “There has been no consultation, and no apparent logic to their decision. It feels like they have just drawn a line across a piece of paper and said ‘get rid of these customers as quickly as possible’.”

In recent months HSBC has looked to shed less profitable segments of its business. In March the bank said it closed the accounts of some customers in the Middle East and North Africa with links to sanction-targeted nations including Syria and Iran, as it sought to reduce the heavy compliance costs associated with these accounts.

This in itself followed on from a $1.9bn fine in December after a report by US lawmakers accused HSBC of lax controls relating to cash coming from Mexican drug cartels and countries under US sanctions, such as Iran and Syria.

HSBC also announced an unspecified number of redundancies in the region last year, where it currently employs about 12,000 people.

A spokesperson for HSBC told Arabian Business that the bank remained committed to SMEs in the UAE. In 2012, the lender said it had almost fully deployed an AED1bn ($270m) fund for small businesses in the Gulf state. Eighty percent of this fund was awarded to SMEs that trade internationally, which is where the bank is increasingly seeking to refocus its operations in the UAE.

HSBC declined to give specifics on what criteria were being used in deciding on account closures, or how many customers were affected by the review.

"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," a statement from the bank read.

"The goal of the review is to identify SMEs 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," it said.

"By concentrating resources on this segment the Bank's aim is to give its customers greater support, including access to a relationship manager. Not only will they benefit from a personalised service and expertise in cross-border commerce, but it will help HSBC ensure that it meets its increasingly rigorous compliance and risk standards," it added.

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Read All 26 Comments

Posted by: M Joseph Monday, 16 September 2013 8:03 PM[UAE] - UAE

UAE Central Bank should ban this irresponsible, unethical and most indecent bank from operating in UAE and shut all their business operations in UAE.

This bank is out to tarnish the healthy business outlook of UAE and therefore their banking license should be revoked.

I would request business owners small or big to teach this unethical bank and its CEO a hard lesson by moving your funds and investments out swiftly,

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Posted by: Abu Hamad Monday, 8 July 2013 8:51 AM[UAE] - UAE

I don't know how the central bank allow them to do this all.....They ask me to pay all the due for my visa card or I have to pay them in 21 installment, if you have visa with 80000, how you can pay this??I took a loan from other bank to pay them.

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Posted by: KUNAL PAREKH Monday, 8 July 2013 8:51 AM[UAE] - UAE

Talking about HSBC?? wE HAVE BEEN GIVEN FACILITY LETTER AS LARGE CORPORATE i BELEIVE AND TILL DATE WE HAVE NOT BEEN ABLE TO USE SAME AS THEY NEED SOME DOCUMENTATION WHICH THEY DID NOT THINK OF AT TIME OF SIGNING FACILITY LETTER. THEIR MOTTO WAS TO GET BIG HEFTY FACILITY FEE. PATHETIC FEE. TILL TODY WE ARE CHASING THEM TO REFUND AND CLOSE OUR ACCOUNT. GOOOD LUCK TO COMPANIES WHO STILL WANT TO DEAL WITH UNPROFESSIONAL BANKERS

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Posted by: leo50 Sunday, 7 July 2013 3:36 PM[UAE] - uae

at best, another P.R. disaster for HSBC..

Posted by: Valerie Houghton Monday, 8 July 2013 8:50 AM[UAE] - Israel

How HSBC boss Stuart Gulliver earned his giant bonus

The Guardian, Monday 27 February 2012 13.33 GMT
HSBC's performance was judged as 'satisfactory in aggregate' ? so chief executive Stuart Gulliver received �7.2m rather than the �12.5m maximum he could have earned. Wow, I am very empathetic to his loss...the pain he must be feeling...

You think he will remain a banking customer at HSBC?

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Posted by: Murad Ali Sunday, 7 July 2013 2:48 PM[UAE] - UAE

We are a HSBC customer and our account were closed on June 16th without notice our funds were blocked for over 12 days , banking with HSBC for over 15 years without any returned chq. over 1.2 million in account we have been put through the most difficult period of our life in UAE .
I request other HSBC account holders be ware and the Central bank of UAE to slap HSBC with fines for their behavior.

HSBC Bad Bank .

Posted by: Zoher Tuesday, 9 July 2013 11:19 AM[UAE] - UAE

Same here, 38 year old A/c closed on June 16th, balance funds slightly under 400K released after 2 weeks! + 3 days to verify signature to release the Manager's cheque, difficult to accept they want to dedicate RM to every account as claimed in their letter, since with their powerful internet banking platform most of the affected SME's I believe were self managing their account online without cost of expensive RM or other branch staff, I know couple of borrowing customers affected under this program are under heavy stress to settle their debts, anyway thank god we are not borrowing customer and it was easy to exit, besides other banks welcomed our business.

Posted by: vijay Tuesday, 9 July 2013 8:44 AM[UAE] - uae

imr murad you are not alone to suffer mashreq bank has recently done the same with most sme s .This is possible only because the central bank seems to have no control over the banks operating here.my account was closed in my absence when i had gone for medical treatment to india without informing me by email post aur verbally and the my clients were told that the account was closed when they tried to deposit funds in my acct and luckily i did not have any pending postdated chks but after banking with the bank since 1979 when it was a very small bank i have come to realise that even a small shop which serves tea for dhm 1 has better business ehtics than these so called rogue banks.