HSBC to halve countries served by private bank, sells assets

Wednesday, 25 June 2014 00:00 - - {{hitsCtrl.values.hits}}

REUTERS: HSBC is halving the number of countries its private bank serves after selling a portfolio of Swiss banking assets, the latest bank to narrow its wealth management focus in a bid to improve profitability and cut compliance risk. HSBC, Europe’s biggest bank by market value, said its private bank served customers from about 150 countries but that was being reduced to about 70. Most of that cut will be achieved through a deal agreed on Tuesday to sell $ 12.5 billion of its Swiss private banking assets to Liechtenstein’s biggest bank LGT Group Foundation. Those assets were held by clients in dozens of countries, including in central and eastern Europe, and some countries in west Europe, Africa and in Latin America that HSBC has deemed as not strategically important. HSBC Chief Executive Stuart Gulliver has sold or closed more than 60 businesses in the last three years as it shuts areas that are loss-making or lack scale. He has also said the bank was too complex and needed to be simplified. The streamlining of the private bank is in line with that wider group strategy, HSBC said. The assets sold to LGT represent about 3% of HSBC private banking assets under management of about $ 382 billion at the end of 2013, and about 15% of the Swiss private bank’s assets of around 75 billion Swiss francs ($ 83.8 billion). HSBC said it remained committed to Switzerland as a key international center for its global private banking business. Wealth management can be an extremely high return business, but a clampdown on tax evasion and tougher compliance rules across banking have put intense scrutiny on the business. Barclays last year withdrew from 130 countries where it offered wealth management, and Credit Suisse also decided to exit or partially pull back from 50 countries last year. HSBC and LGT said about 70 staff would transfer as part of the deal. HSBC has about 1,400 in its Swiss private bank. It said the deal is subject to regulatory and other approvals and is expected to complete in the last quarter of this year.

Iran seeks to resolve HSBC freeze on some trade financing

LONDON/ANKARA (Reuters): Iran is lobbying to get HSBC to process humanitarian trade transactions that Europe’s biggest bank has frozen because of concerns about potential breaches of international sanctions, sources familiar with the trades told Reuters. Banks such as HSBC are responding to tougher scrutiny over financial dealings with some countries including Iran, even as the Islamic Republic has won relief from some sanctions since its interim deal with world powers last November under which it has scaled back some aspects of its disputed nuclear program. French bank BNP Paribas is facing a fine of as much as $ 9 billion and other penalties over allegations of US sanctions breaches involving Iran and other states between 2002 and 2009. Iran was never barred from buying food or other humanitarian goods under sanctions first imposed in 2006 over its nuclear activity. But measures by the European Union and the United States have made trade generally more difficult over the past two years, hindering payments and shipping. “HSBC, like other banks, is increasingly worried about falling foul of any sanctions oversights. It is just not worth the risks, especially in this climate,” a banking source, who declined to be named due to the sensitivity of the issue, said. European and US trade sources, who also declined to be named due to sensitivities over business with Iran, said HSBC had in recent weeks frozen some transactions for approved goods. “My direct experience is that they have blocked payments going into and out of Iran,” a European trade source said. HSBC said it continued to consider humanitarian payments involving sanctioned countries “on a case-by-case basis” to ensure they are in accordance with applicable regulatory requirements, and otherwise consistent with the bank’s policy. “This review process can be particularly challenging and therefore can take time to conclude. Our policy only requires the freezing of these payments where required under applicable laws and regulations,” HSBC said in a statement issued in response to Reuters questions. HSBC declined to comment on whether it had received any overtures from Iran. A US-based trade source said that payments with Iran via HSBC had not gone through in recent weeks. “HSBC seems to have stopped processing financial transactions for allowable humanitarian trade,” the source said, adding that this could have wider implications. “The (financial) ecosystem with Iran is so fragile that the loss of even one entity, (like HSBC), can have an existential consequence.” Three Iranian Government officials said HSBC had stopped processing payments, and that Tehran was trying to resolve the issue. “We are in talks to solve the problem,” one said. A second Iranian Government official said the West was “trying to pressure Iran” to accept their conditions in continuing negotiations with the six world powers on a long-term settlement under which Tehran would cede any means of diverting its nuclear energy program to atomic bomb-making in exchange for a removal of all sanctions against it. Iran has long insisted it seeks only peaceful nuclear energy, not bombs. “These sanctions will be lifted sooner or later and we will prefer to work with those banks that helped us under sanctions,” the second official said. Iran’s Central Bank Governor Valiollah Seif told Reuters: “We never had any such (humanitarian/food commodities finance) interaction with HSBC.” In recent days, the suggestion that the United States and Iran may have common interests on Iraq has raised hope of overcoming stumbling blocks to a final nuclear agreement between Tehran and the world powers.