HSBC Swiss Private Bank cuts ties with middle eastern clients amid scrutiny

HSBC Holdings’ Swiss private banking arm is in the process of discontinuing its services to a segment of its high-net-worth clientele from the Middle East, reported Bloomberg.

The affected clients, including over 1,000 individuals from Saudi Arabia, Lebanon, Qatar, and Egypt, are being informed that they will need to transition their banking arrangements elsewhere.

The action particularly targets clients with assets above $100m, who are deemed high-risk by the bank's internal assessments, the report said.

The initiative to end these client relationships is expected to be largely completed within a six-month timeframe and a specialised team is being put in place by HSBC to oversee the termination of these banking services.

In an e-mailed statement to the publication, HSBC International Wealth and Premier Banking CEO Barry O’Byrne said: “HSBC announced plans in October last year to reshape the Group to accelerate strategic delivery. As part of this, we are evolving the strategic focus of our Swiss Private Bank.

The bank added: “We are creating a simpler, more dynamic organisation, focused on increasing leadership and market share in the areas where we have a clear competitive advantage.”

HSBC's Swiss private banking sector has faced challenges in maintaining its position in the competitive Middle Eastern market, where it has traditionally been a dominant capital markets player, the report said.

The bank's private banking arm has struggled to keep pace with Swiss competitors in wealth management services.

Last month, HSBC disclosed that its Private Bank (Suisse) unit was under investigation by law enforcement authorities in Switzerland and France for suspected money laundering activities linked to “two historical banking relationships.”

According to Bloomberg, the investigation involves alleged misappropriation of funds by the former head of Lebanon's central bank.

In June last year, Finma has pointed out two instances where HSBC Private Bank (Suisse) did not thoroughly verify the source and intended use of assets, involving transactions exceeding $300m between Lebanon and Switzerland from 2002 to 2015.

By considering this last year, HSBC was ordered to overhaul its anti-money laundering protocols and reassess high-risk client relationships, particularly those involving politically exposed persons (PEPs).

The bank is also prohibited from taking on new PEP clients until it completes a review and verifies compliance with regulatory requirements.

"HSBC Swiss Private Bank cuts ties with middle eastern clients amid scrutiny " was originally created and published by Private Banker International, a GlobalData owned brand.

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