HSBC to scale back global Islamic business

Monday, 8 October 2012 00:00 - - {{hitsCtrl.values.hits}}

HSBC Holdings is to significantly scale back its global Islamic banking operations, it said on Thursday, as part of a wider restructuring at the UK-based bank.

The bank will focus its Islamic finance business on customers in Malaysia and Saudi Arabia and keep a limited presence in Indonesia, the bank said in a statement.

Except for wholesale banking operations, HSBC will no longer offer Islamic products in the United Kingdom, the United Arab Emirates, Bahrain, Bangladesh, Singapore and Mauritius, it said.

HSBC has been one of the pioneers in developing Islamic finance among big global banks, so the scaling back of its operations may be seen as a blow to the industry. Last year, HSBC became the first Western bank to issue an Islamic bond when its Middle East unit sold a $500 million sukuk.

The bank said that, after the move, it would still retain around 83 percent of the Group’s Islamic business revenue.

It is understood that staff at HSBC Amanah, the bank’s Islamic banking arm, will be absorbed into the main bank, although there will be some job losses.

HSBC is cutting thousands of jobs and exiting non-core businesses as part of Chief Executive Stuart Gulliver’s plans to cut costs and improve profitability at the bank.

Islamic finance, based on principles such as bans on interest and pure monetary speculation, has grown rapidly over the last several years because it draws on pools of investment money in the oil-rich Gulf and Asia that have been relatively untouched by the global financial crisis.

The industry’s global assets are expected to rise 33 percent from 2010 levels to $1.1 trillion by the end of 2012, according to consultants Ernst & Young.