HSBC to Close New Zealand Wealth and Personal Banking Business

The London-listed bank’s decision to close its New Zealand wealth and personal banking business is part of its plans to exit less profitable businesses globally to focus on expanding in specific Asian markets. The process will happen over several years in a phased manner, it said in a statement. It can “no longer justify investing into this business given the changing operating requirements in the market and the scalability of the business,” it added.

HSBC is continuing to shift its focus to Asia, which will be its primary driver for growth in the future. But it is doing so at the expense of its presence in many other markets, which has led to criticism from some quarters. This has included the bank’s endorsement of China’s controversial national security law and the closing of the accounts of pro-democracy activists in Hong Kong. Its chief financial officer Georges Elhedery, in a recent interview with Reuters, acknowledged that the bank is reviewing an exit from about one in five of its markets worldwide, though he declined to name them.

In New Zealand, the bank has stopped taking on new retail customers and is helping existing customers to switch to other personal and wealth service providers. It said term deposits and longer-term arrangements like home loans would be honored. The bank will continue to operate and grow its wholesale banking business in New Zealand, which includes commercial banking for international clients and its market-making and securities services businesses.

It’s a reminder that the age of globalization is rapidly ending and that the value of having a sprawling network of offices worldwide is being eroded. Instead, accessing the best assets in the most competitive and fastest-growing markets is becoming increasingly important. In that sense, it makes excellent sense for banks to look for the most efficient way to grow their operations in the most important markets.

As the bank winds down its operations in the countries it is withdrawing from, it will free up more capital to invest in growth in its core businesses in Asia, which should help them drive sustainable growth there. It will also allow the bank to focus better on the specific challenges and opportunities in those markets and use its resources best.

HSBC’s decision to close its New Zealand wealth business is essential to the bank’s pivot to Asia. But it shouldn’t be the last. The company needs to review how it operates in all its markets and find ways to streamline its operations.

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