HSBC to close half of Indian Banking in Digital Banking push

HSBC Holdings plans to shut almost half its branches in India and rely more on digital banking to expand its consumer business in the South Asian nation. (Bloomberg report)

The London-based bank will cut 24 of its 50 branches as it seeks “the right mix of digital versus physical branch distribution,” according to an e-mailed statement on Thursday (May 19). The outlets to be closed account for less than 10 per cent of HSBC’s retail customer base in India, the bank said.
Chief executive officer Stuart Gulliver is paring back HSBC’s sprawling global network and shutting money-losing businesses to improve earnings hurt by compliance costs. Since 2011, the bank has slashed more than 87,000 positions, exited at least 80 businesses and reduced its footprint to about 71 countries and territories from 88.

HSBC has announced cost-reduction measures globally. Six months ago, the lender announced it will shut its private banking business in India, amid an investigation by India’s tax department against individuals who had unaccounted foreign currency accounts in the bank’s Swiss branch.

One branch will be closed in Chennai, Guwahati, Indore, Jodhpur, Lucknow, Ludhiana, Mumbai, Mysore, Nagpur, Nasik, Patna, Pune, Raipur, Surat, Thiruvananthapuram, Vadodara and Vishakhapatnam, along with two branches in New Delhi and five in Kolkata, HSBC said.

“The consolidation of the branch network will take place over the coming months in a phased manner…the branches being consolidated account for less than 10% of HSBC’s retail customer base in India,” it said in a press release. No timeline for the closures was given. The bank employs more than 33,000 people in India, including those in its outsourcing centre. About 1% of the employees will be affected because of this measure, a spokesperson said.

HSBC’s retail banking and wealth management business in India slipped into a $25 million loss in 2015 after making a $4 million profit a year earlier. India was the thirdmost profitable market in Asia last year, making a $606 million profit before tax, behind $3.06 billion from mainland China and $9.8 billion from Hong Kong. “The staff impacted because of the branch closures will be from the front end,” the person said. HSBC said some of the staff will be given an opportunity to move to other branches or businesses.