HSBC Share Price: Scaling Back Wealth Management Business

on Sep 2, 2013
Listen Monday, September 2nd: HSBC Holdings (LON:HSBA) is to cease offering wealth management products in Bahrain, Jordan and Lebanon from October 7, Reuters has reported.

The decision is part of a wider move by the UK’s largest bank to exit small or insufficiently profitable operations globally, the newswire quoted the lender as saying in a statement issued to it yesterday.
The bank has already cut its retail banking business in some Middle Eastern nations, including Bahrain, Jordan and Lebanon, and merged its operations in Oman with a local bank after HSBC’s CEO Stuart Gulliver initiated a three-year global restructuring. Islamic and private banking operations have also been scaled back as part of the bank’s strategic review aimed at improving profitability.

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Existing customers of the wealth management business will continue receiving basic services and their investments will be managed until maturity, the lender said. The decision will not cause job losses as those affected will be absorbed by other teams within HSBC’s retail and wealth management division, a banking source has said, as quoted by the Gulf Times.

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**SME Loan Fees**
As expected, HSBC yesterday increased banking fees for 700,000 small business customers as part of an overhaul of accounts aimed at providing “clearer, more transparent pricing”.

The monthly account maintenance fee rose from £5 to £5.50 for the businesses that already pay fees. Over 150,000 SMEs, which currently get free services for an initial 18-months period, will also have to pay the new fees after the end of this period.
The bank commented that it remains committed to the UK’s SME market, emphasising that it approves four in five lending requests it receives from SMEs. Charity and community account customers, however, will continue to receive free services.

“We would be against anything that hinders, harms or even prevents viable businesses from obtaining credit,” said on Thursday a spokesman for the British Chambers of Commerce, which represents about 90,000 small and medium-sized enterprises.
Phil Orford, chief executive of the Forum of Private Business, criticised the changes saying: “Whilst the fees individually are small, combined they amount to roughly £36million of extra costs on those businesses that would otherwise have been spent on growth and investment.”
!m[Higher Fees for SMEs Take Effect](/uploads/story/5228/thumbs/pic1_inline.jpg)
Bank of England’s latest figures show that while overall business lending increased by £500million in July, lending to SMEs decreased by £900million.
It remains to be seen whether the higher fees will trigger a massive exodus of SMEs from HSBC, especially if competitors don’t follow suit. From September 16 it will be easier for bank customers to switch banks and change overs should be completed within seven days.
In today’s morning session on the London Stock Exchange investors traded HSBC’s shares 2.16 percent higher.
**As of 10.30 BST buy HSBC shares at 690.10p.**
**As of 10.30 BST sell HSBC shares at 689.70p.**

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