x Abu Dhabi, UAEFriday 21 July 2017

HSBC scraps free global transfers and cuts deposit interest rates

Breaking News: HSBC has raised charges for transferring money overseas and has cut interest rates on deposits.

HSBC has scrapped free international transfer fees on its accounts and cut interest rates on deposits to zero.

The move comes just weeks after the Central Bank imposed limits on retail lending practices in the UAE.

Customer service representatives said that HSBC Advance Accounts would drop interest rates from 0.25 per cent presently to 0 per cent. In December it was 0.9 per cent.

The bank will also withdraw its free Telegraph Transfer payments from 8 April, adding a Dh50 fee per transaction.

A bank spokeswoman said that processing fees, currently half of the usual price because of a promotion, would rise to 1 per cent of the total loan amount, in line with new Central Bank regulations.

The increase in charges follows a circular from the Central Bank limiting the amount of personal loans that banks could issue to 20 times an individual's salary or total income. The regulations also imposed limits on car loans and credit cards.

Saleh al Tenaiji, senior manager of the Central Bank's banking supervision and examination department. "We are monitoring banks on this situation."

Analysts said that the changes in interest rates were a reaction to the Central Bank's new rules. Jaap Meijer, a financial analyst at Alembic HC Securities, said that the result of the circular would be slower consumer lending.

"Retail fees are only a small proportion of total revenues (we estimate around 5 per cent) and banks may increase net interest margins to offset part of this pressure."