The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

HSBC’s departure from this nation is “not jurisdiction driven at all”, although 12 Bahamian jobs will be lost through the global banking giant’s decision to exit a “non-core” business by 2014.

Peter Waterhouse, the Hong Kong & Shanghai Banking Corporation’s local managing director, confirmed yesterday that the UK-headquartered group’s own internal review had led to the end of its 37-year stay in the Bahamas.

He told Tribune Business that with a relatively small customer base, and “limited product range”, HSBC’S continued presence in the Bahamas was “commercially non-viable” when set against the group’s goals.

“It’s was not that big, and it was decided that it did not fit with the core business,” Mr Waterhouse said of the Bahamian operation’s impending closure

He added that it stemmed from HSBC’s decision in 2011 to conduct “a global review of every business” to see if it fitted in with the group’s long-term strategy and financial targets.

Noting that a shake-up in HSBC’s senior management occurred at the same, Mr Waterhouse said global banking groups often picked up businesses as they expanded, only to effectively discard them later.

Given that HSBC operates from 6,600 offices in 80 different countries, and had $2,645 billion in assets at the 2013 mid-year point, Mr Waterhouse acknowledged that the global review had taken time to drill down to the Bahamas.

“We weren’t the priority,” he added, although the Bahamian unit’s closure by year-end 2014 will leave 14 staff - two expatriates and 12 Bahamians - potentially looking for new jobs.

Emphasising that HSBC wanted to announce the closure in advance, so as to give staff time to plot their next career move, Mr Waterhouse said of the Bahamian staff: “We will be negotiating with them, and see what happens to them and what’s best for them.

“We’re bound by Bahamian legal requirements, and we will see what we do as and when the time comes. We’re not leaving until next year.”

He dismissed suggestions that HSBC’s Bahamas exit had been prompted by a US Senate subcommittee investigation into anti-money laundering weaknesses at its Cayman Islands operations, which had resulted in the bank paying a $1.9 billion fine to settle charges brought by US prosecutors.

And Mr Waterhouse also rejected any notion that HSBC’s Bahamas exit may have been driven by issues and concerns specific to this jurisdiction.

“It’s not jurisdiction driven at all. Absolutely not, no. It’s all been from our own perspective; whether we fit in [with HSBC’s core direction and strategy],” Mr Waterhouse told Tribune Business.

“They’ve [HSBC] got nothing against the Bahamas as a jurisdiction. I’ve been here a few years, and there were things moving on here that we were quite happy with.

“I have a very close relationship with the Central bank, as we have to, and speak to them regularly on what we’re doing. I’ve had a very happy relationship with them for many years. The jurisdiction was not a problem.”

While there will likely be some relief that Mr Waterhouse absolved the Bahamas of blame for HSBC’s departure, this jurisdiction can ill afford to lose major global players of high repute.

The bank’s exit may also help create the impression, in some quarters at least, of an international financial services sector that continues to be in slow decline and is ‘slip sliding away’.

What HSBC’s exit highlights above all else is the fact that, with 95 per cent of its 230-plus banks and trust companies foreign-owned, the Bahamian financial services industry is vulnerable to the whims of global head office decision-making.

The 2008 financial crisis and subsequent recession, coupled with the constant regulatory pressures on international financial centres, have all spurred moves to either exit certain jurisdictions or consolidate operations into one nation.

With jurisdictions having to justify ‘their reason for being’, this is one reason why the Bahamas Financial Services Board (BFSB) spends a great deal of time influencing head office perceptions of this nation.

Meanwhile, HSBC remains poised to ‘bring down the curtain’ on a 37-year history in the Bahamas, having first established a physical presence in 1977.

While declining to reveal its Bahamian operation’s customer numbers or total assets under management, Mr Waterhouse said: “We had a full operation here, but we never did very much in terms of customer business.

“We had a very limited product range, and it was not commercially viable from that perspective.”