Having announced shutting down of its retail brokerage arm on Thursday, the bank has given its customers a notice period of over a month to ensure hassle-free closure of accounts
GN Bureau | October 18, 2013
Hong Kong and Shanghai Banking Corporation (HSBC) which announced the shutting down of its retail broking and depository business in India has given customers a notice period till December to transfer securities lying in their de-mat accounts to other accounts and brokers to facilitate the closing of accounts.
"The decision to provide notice to de-mat and broking customers in excess of the mandated one month (period) is to provide operational convenience in relation to the closure of customer accounts," the bank said in a notice sent to customers.
The bank announced the closure of its retail broking and depository business owing to declining profits with investors preferring gold, real estate and bank deposits over trading in shares. However, the bank will continue with its institutional brokerage and depository business.
"HSBC is discontinuing its retail broking and retail depository services business in India, operated under HSBC InvestDirect Securities (India) Limited (HISL). HSBC will cease opening new retail broking accounts with immediate effect, however, it will notify existing clients of the date of discontinuation of its retail broking and depository services, but continue to provide them with retail broking services until then," the bank had said in a statement on Thursday.
The bank further said that it had to take the extreme step only after it had exhausted all its options to keep the business afloat. The move is likely to leave around 300 employees jobless. However, the bank has assured that all the affected employees will be appropriately compensated. "Impacted employees will be offered a fair and equitable severance pay in line with HSBC policy, and career transition services will be extended through a professional agency," according to the bank’s statement.
HSBC had been operating the retail broking business since 2008 after it purchased the business from Infrastructure Leasing & Financial Services (IL&FS) for around Rs 1,000 crore.
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