HSBC might be branded the world's local bank, but new customers in the UAE face being turned away if they earn less than Dh20,000 a month.
HSBC ponders wealthy-only idea
HSBC might be branded the world's local bank, but new customers in the UAE face being turned away if they earn less than Dh20,000 (US$5,444) a month. In a move to focus on wealthy clients, the world's fifth-largest lender by assets is looking at ways to cut back its business for small account holders.
"You want to have fewer clients and serve them right instead of having lots of clients who earn less than Dh20,000," said Venkatesh Srikantan, the regional head of assets and liabilities at HSBC Middle East. "In other words, we want fewer clients who earn less than Dh20,000." HSBC has more than 125 million customers worldwide with more than 10,000 offices in 83 countries, and eight branches in the UAE. The Middle East operation contributed about 13 per cent to the bank's global first-half profits.
Like other banks, HSBC has been hit by the global economic crisis and has seen its pre-tax profits halved to US$5 billion (Dh18.36bn) in the first six months of this year. In the Middle East, HSBC reported a 35 per cent fall in pre-tax profits to $643 million compared with the same period last year. Moving away from high-maintenance small accounts made sense, said Mr Srikantan. "We will have a stronger focus on our target market - affluent international clients. They are the most optimal users. Of course, that does not mean we will never have clients with less income - we won't deny it."
Even so, the days of easily opening a bank account at HSBC's Dubai branch in Deira, which caters for small businesses in a bustling, middle-class neighbourhood, may be over. Angela Anthony Noronha, a HSBC client relationship manager there, said customers with monthly incomes below Dh20,000 could no longer get full banking services such as utilising their local branch for free, taking out loans, obtaining credit cards or overdraft facilities.
"Before you could open an account regardless, even with an income of Dh3,000," she said. Now clients with a monthly salary of around Dh18,000 only get a personal account with an ATM card and access to internet banking." Brand experts say moving upmarket to focus on wealthy clients could damage HSBC's image as the global bank on every high street. "Every strong brand needs to be credible," said John Brash, the founder and chief executive of Brash Brands, an independent strategy and branding company.
"You can't be the Body Shop in 90 countries and something else in the 91st. If you take the strategic business decision to get more yield and higher margins, then I wouldn't play up my slogan 'the world's local bank' too much." According to latest estimates, HSBC's name was worth $19bn after it was ranked the leading international bank in the BrandZ Top 100 Most Valuable Global Brands in June. Mr Brash pointed out that the lender's image could suffer, which would open up opportunities for its major competitors.
Although many major competitors in the banking sector declined to comment on HSBC, the UAE's largest lender by assets, Emirates NBD, said it would continue to retain a "wide customer" base. "Our focus is on serving the interest of a wide range of customers depending on their histories and requirements," said Vikram Krishna, the head of retail lending at Emirates NBD. "We give loans starting at a monthly income of Dh1,500 for employees whose companies have customer credit programmes."