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HSBC scales back Islamic finance from Bangladesh
Publication Date : 05-10-2012
Leading British multinational bank HSBC has stopped offering Shariah-compliant products and services in Bangladesh and five other countries.
The other countries are the UK, the UAE, Bahrain, Singapore and Mauritius, the bank said in a statement yesterday.
"It was done as part of a strategic review of our Islamic financing business," said Talukdar Noman Anwar, head of communications at HSBC Bangladesh.
The decision comes into effect immediately, he said.
HSBC will, however, continue its wholesale Islamic financing business -- Sukuk -- in these countries and globally through its operations in Saudi Arabia and Malaysia.
The UK-based bank launched its global Islamic financial services business in 1998.
The bank introduced its Shariah-compliant products and services in Muslim-majority Bangladesh in December 2010.
Last month, the banking giant sold its operations in Pakistan, comprising 10 branches, to the country's JS Bank, as HSBC Chief Executive Officer (CEO) Stuart Gulliver is offloading assets in many countries around the world to cut costs by US$2.5 billion to $3.5 billion and revive profit.
HSBC said it will focus its Islamic finance offering on customers in Malaysia, and Saudi Arabia, and maintain a limited presence in Indonesia.
The three countries together account for 83 per cent of HSBC's Islamic business revenues and the six countries the rest.
In Saudi Arabia, Islamic financial products will be offered through Saudi British Bank, in which HSBC Holdings indirectly holds a 40 per cent shareholding.
HSBC Saudi Arabia Ltd, in which HSBC Holdings indirectly holds a 49 per cent shareholding, will offer Islamic investments and wholesale Islamic financial products to customers globally.
HSBC is the market leader in Sukuk issuance.
The announcement represents further progress in HSBC's execution of its global strategy set out in May 2011. It also demonstrates the group's plans to drive growth and improve profitability by restructuring or exiting businesses that do not meet its investment criteria. Of its 13 branches in Bangladesh, one is for Amanah.
The HSBC official said the bank has decided to stop opening Amanah accounts in the six countries as its business of Shariah-compliant products did not fare well.
"It, however, does not mean that we will close down all the existing accounts immediately. We will talk to our Amanah clients and sort the issue gradually through discussion," he said.
Transferring the accounts of the bank's Amanah clients in Bangladesh to other banks could be one of the options, he said.
He also said the branch would not be closed and employees at the branch would be redeployed at the bank's other branches in the country.
There will be no job cuts, he said.