By Daniel Shane
Customers irate after being informed that accounts will be closed in two months
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.
HSBC here is a franchise and as such their rogue actions affect the credibility of the real HSBC.
I have never heard anyone say anything positive about them anyway. Everyone should just close their accounts and move to another bank. The customers always have the final say in numbers
The world's local bank feels more like the world's worst bank. Sad that after 6 years of banking with them, all they could was sent me a registered mail. No phone call. No email. Nothing.
HSBC have a very negative reputation for not respecting their customers. I know many individuals who are suffering from this banks' abrupt and selfish in-explainable decisions. Stick with the large local banks that's what I say...
I have spent the last 60 days trying to get in touch with someone at the bank to discuss the proposed closure with.
Does it not occur to HSBC that any ongoing business has cheques in the market, letters of credit that are current, accounts with suppliers and clients for funds payment...none of which terminate in 60 days?
I submitted a formal complaint to the central bank and I strongly advise anyone else who has found themselves in the same predicament do likewise...go online it takes two minutes http://www.centralbank.ae/..
Banks forget they have a responsibility over and above shareholder returns...they need to practice with greater integrity, honesty and clarity........please complain about bad service...the Central Bank will respond if enough voices are heard.
Unfortunately, HSBC is a bank like any other; it will not email or make telephone calls when it comes to these matters. Risk management is the name of the game and new sanctions have added considerable additional responsibilities on the banks and substantially increased their risks, especially with regards to banks that have customers dealing with countries and individuals on the sanctions list. Expect more of this to happen by other leading banks. Banks in general provide excellent service to selective customers and SME customers do not seem to be one of them.
"think global act local" HSBC's slogan is the biggest load of tosh!! Bring back British Bank of the Middle East (BBME) which for all it faults worked well the Gulf! Interesting to note that the HSBC SWIFT Payment code is still BBME!!
I will never ever recommend this bank to anybody and I am actually telling my friends to switch to a local bank instead. HSBC is the worst bank i have ever seen in the Middle East!
Thanks for the heads up, Lulu. Have done exactly that. The least the bank can do is give me a plausible reason as to why my business is none of their business anymore.
Omar, fully agree HSBC is the worst of a bad lot, will say that the local banks are not much better but at least they are forced to give a level of respect to their clients while HSBC is just arrogant
I see people complaining here having banked with HSBC for 6 years or so, we have been asked to close our account having banked with HSBC for over 30 years! besides we do not have any borrowing relationship and in fact maintain substantial deposits with HSBC. Having said this, HSBC's services are one of the best in the world, but be aware usually banks are under no obligation to give explanation for account closing, when you sign up to a bank account with any bank check your account opening forms where you consent to the bank's certain discretionary actions one of them being closing your account or denying you a service without explanation. If you are desperate try sending an email to customer services, giving your arguments and compelling reasons for not being able to switch to another bank and maybe they might consider your reasons otherwise be proud of your business, if someone does not want it take it elsewhere.