HSBC, one of the largest multinational banks operating in Egypt, has recently shut down a number of its small and medium sizes enterprises’ (SMEs) accounts in the country.
“We have evaluated the SMEs accounts and we’ve decided to terminate some of them – not all,” said a source at the lender.
The source, who chose not to be identified, stated that The HSBC Group has globally been conducting a review of all of its businesses since May 2011 in an effort to streamline its business and improve its return on capital.
“As part of this, HSBC Bank Egypt has been reviewing its portfolio of small business customers in Egypt,” the source said. “As a result, HSBC has closed some of its business banking accounts many of which were inactive and none of which were borrowing accounts.”
The source added that the bank remains strongly committed to the SME segment in Egypt: “The goal of the review is to identify SMEs that trade internationally or which have offices overseas, or intend to operate cross border in the near future. Because international business is at the heart of HSBC’s strategy, these are the customers whose needs HSBC is best-placed to address.”
The bank sent a letter to some of its SMEs business customers terminating the services it provides.
The letter, which read: “Important Notice: Changes to services provided to HSBC business banking customers In Egypt” in red, saying that the shutdown plan comes from the bank’s stated desire “to provide international expertise in the line with key strengths and obligations as a global banking provider.”
“I am sorry to advise that you will no longer qualify for business banking services from HSBC, and we will need to close your account with us,” the letter said.
The bank gave a 60-day notice from the date of the letter to its clients, after which HSBC said it would issue a manager’s cheque for any outstanding balance on the client’s account on the date of closure.
“The bank might have conducted a study and realised that there is a risk they want to avoid, so this might have been a decision from HSBC’s head office to reduce risk,” said one banking sector expert.
The bank sent similar letters of notice to shut down the SMEs accounts in the United Arab Emirates in June.