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HSBC cancels plan to divest Pakistani banking business, shuts Indian brokerage business

BBR Staff Writer Published 24 October 2013

London-based global financial services organization HSBC has scrapped an agreement to divest its banking business in Pakistan to JS Bank, as it failed to secure concerned regulatory approvals.

Confirming the termination of the contract, HSBC Bank Middle East Limited (HBME), an indirect wholly owned subsidiary of HSBC, was quoted by media sources as saying that it will look for other options for its banking operation in Pakistan.

In April last year, the bank inked an agreement to dispose of its Pakistani banking operation, which manages approximately 10 offices and had gross assets of about $635m, as of 30 June 2012.

In a surprise move, the British lender said that it will shut down its struggling retail brokerage and depository business in India, which operates under HSBC InvestDirect Securities (India) Ltd (HISL).

The closure of the business named HSBC InvestDirect will result in loss of approximately 300 positions, the lender said.

"We are discontinuing its retail broking and retail depository services business here, operated under HSBC InvestDirect Securities," HSBC India said in a statement.

"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," the company added.

The decision to close Indian retail brokerage and depository business comes five years after the bank entered the retail brokerage business in May 2008, by purchasing 93% stake in IL&FS Investsmart for $296.4m.

In India, HSBC will remain investing in its other businesses, including retail and commercial banking, wealth management, investment banking and capital markets, institutional broking, asset management and insurance services.