By Alison Lowe
Nassau Guardian Business Editor
NASSAU, Bahamas -- A decision by HSBC to exit the banking market in The Bahamas in no way indicates deficiencies on the part of the Bahamian financial services environment, according to the minister of financial services.
Minister of Financial Services, Ryan Pinder
Responding to an announcement by the Hong Kong and Shanghai Banking Corporation Limited (HSBC Ltd) that it will close its Nassau operation by year end 2014, Ryan Pinder said he “would not be surprised” if the decision came as part of an overall “strategic review” of the company’s presence in the Caribbean region following the revocation of one of its branch banking licences by the Cayman Islands Monetary Authority (CIMA) earlier this year.
In a release issued late Friday, HSBC stated: “As part of its ongoing strategic review of all group businesses, HSBC has decided to exit the banking market in The Bahamas through the closure of the Nassau branch of The Hong Kong and Shanghai Banking Corporation Limited.
“The closure of this small non-core operation, which is subject to regulatory approval, is expected to be complete by year end 2014.”
The company directed media queries to HSBC Bahamas chief executive officer Peter Waterhouse. Up to press time, Waterhouse did not return a call left late Friday.
Pinder said that he was not informed of the decision to close prior to the announcement being made. However, he added that as far as he was aware, the operation was a “very small back office” and while he does not have exact figures, he believes it may impact only around five staff members. It is not clear if any Bahamians would be impacted.
In February 2013, HSBC saw its banking licence revoked in the Cayman Islands for the local branch of HSBC Mexico SA.
According to the Caymanian Compass, a local Cayman Islands newspaper, the bank was named last year in an investigation by the US Senate’s Permanent Subcommittee on Investigations of anti-money laundering weaknesses at HSBC.
The investigation had pointed to a significant number of high risk transactions with insufficient anti-money laundering controls involving US dollar accounts held by Mexican residents at the branch, a class B banking licence holder in the Cayman Islands.
In July 2012, following the release of the subcommittee report, CIMA launched its own investigation of HSBC Mexico SA to determine whether the bank and its Cayman affiliate had breached any local laws or regulations.
In a decision notice dated February 27, 2013, the Monetary Authority set out its decision to revoke the category “B” banking licence held by HSBC Mexico SA.
The decision came just under three months after HSBC agreed to pay a $1.9 billion fine to settle allegations by US prosecutors relating to concerns over weaknesses in anti-money laundering measures at the bank.
The HSBC Group HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The group serves customers worldwide from around 6,600 offices in 80 countries and territories in Europe, Hong Kong, the rest of Asia-Pacific, North and Latin America and the Middle East and North Africa.
With assets of US$2.645 billion at June 30, 2013, the HSBC Group is one of the world’s largest banking and financial services organizations.
Republished with permission of the Nassau Guardian