HSBC to shut half of its branches in Bangladesh

British banking giant HSBC is set to shutter six of its 13 branches in Bangladesh as part of its global strategy to cut costs.

The branches will be closed down in phases by the end of 2016 and the customers will be informed well in advance of the shutdown, said Talukdar Noman Anwar, head of communications at HSBC Bangladesh.

The branches listed for shutdown are located in Anchor Tower on Bir Uttam CR Dutta Road, Banani and Lalbagh in Dhaka; Narayanganj; Mymensingh and Sylhet.

The shuttered branch's customers will still be able to access the bank's services through its other branches in Dhaka and Chittagong and through telephone banking or online, Anwar said.

There will be no job cuts: the affected 50 employees would be redeployed to HSBC's other branches in Bangladesh.

The British Bank also plans to shut 24 of its existing 50 branches in India, reported Bloomberg quoting unnamed sources.

In 2016, it has already closed 78 branches in its home country of the UK and has announced plans to shutter 53 more.

HSBC had submitted four applications to the central bank between February 16 and May 4 to get the approval to close down the branches.

Bangladesh Bank had initially refused to provide the approval on grounds that foreign investors might perceive the episode as an example of an unfriendly business environment in Bangladesh.

But on May 12, it finally gave HSBC the go-ahead, said an official of the central bank.

BB officials said the British bank is shuttering the branches as part of its new strategy to pare back its sprawling network across the globe with the view to improving earnings hurt by high compliance costs, fines and low interest rates.

It is unlikely that the bank would wind up its operations in Bangladesh completely, they said.

Anwar reassured that Bangladesh is an important market for the British bank. "Our goal is to continue to review and shape our business for long term growth and in line with customer needs," he added.

HSBC logged in Tk 882 crore as operating profit in 2015 -- the fourth highest on Bangladesh's roster of 56 banks. In 2014, it made a profit of Tk 969 crore.

Of the nine foreign banks operating in Bangladesh, HSBC is the only one with a presence in all the eight export processing zones.

More than 10 percent of Bangladesh's $70 billion annual global trade is channelled through HSBC, with the bank helping exporters ship products to more than 100 countries each year.

HSBC is also the first bank in Bangladesh to offer low-cost financing solution to onshore apparel exporters and to facilitate trade settlement based in the renminbi.

Bangladesh also recorded the highest 'trade confidence score' in HSBC's latest survey of 25 countries.

In an interview with The Daily Star earlier this month, Stuart Tait, head of global trade and receivable finance of the British bank, termed Bangladesh a growth market as the country, with a booming economy, offers huge business opportunities.

"Bangladesh is an important market for trade finance within the Asia Pacific and within the group," he said.

Once a sprawling bank across 87 countries, HSBC has exited swaths of businesses across the globe to improve profits and now has operations in 71 countries.

Its main regions now are Asia, the UK and North America. In February, HSBC decided to stay based in London after considering a return to its original Hong Kong base.

In 2012, the banking giant sold its operations in Pakistan, comprising 10 branches.

In November last year, the Hindu newspaper and the BBC reported that HSBC would shut down its private banking unit in India, where the increasing number of wealthy individuals has led to intense competition for their business.

HSBC's pretax profits in the first three months of 2016 fell 14 percent year-on-year to $6.1 billion.