Tuesday, January 8, 2013

HSBC quits Islamic biz in UK, focuses on M’sia and Saudi

By Habhajan Singh

HSBC Holdings Group is pulling out of the retail Islamic finance business in the UK and a number of countries, but will continue to seek sukuk issuance from Malaysia and other jurisdictions.

It has decided to focus its Islamic finance offering in Malaysia and Saudi Arabia, and maintain a limited presence in Indonesia.

This is a result of what it called a “strategic review” of its Islamic finance business, the group said in a statement released yesterday.

“HSBC will continue to offer wholesale Islamic financing/Sukuk products to its global client base through its operations in Malaysia and Saudi Arabia,” the statement said.

Following the restructuring, HSBC said it would retain 83% of the group’s Islamic business revenues.

In Malaysia, HSBC faced stiff competition on the Islamic finance front from local competitors Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd, and foreign players like Standard Chartered Bank Bhd.

In Saudi Arabia, the group intends to offer Islamic financial products through The Saudi British Bank (SABB), in which HSBC Holdings plc indirectly holds a 40% shareholding.

HSBC Saudi Arabia Ltd, in which HSBC Holdings plc indirectly holds a 49% shareholding, will offer Islamic investments and wholesale Islamic financing/sukuk products to customers globally.

HSBC is the biggest sukuk underwriter, ahead of Maybank and CIMB after handling 78 sales valued at US$10 billion (RM30.56 billion), among 42 companies tracked by Bloomberg.

Aside from the UK, HSBC said the group will cease to offer Shariah-compliant products and services in the United Arab Emirates, Bahrain, Bangladesh, Singapore and Mauritius, with the exception of wholesale Islamic financing/sukuk products that will continue to be offered in these jurisdict ions and globally through HSBC Saudi Arabia.

“This announcement represents further progress in HSBC’s execution of the global strategy set out in May 2011 and demonstrates the group’s commitment to driving growth and improving returns by restructuring or exiting businesses that do not meet its investment criteria.

“HSBC remains committed to delivering world-class Shariah-compliant products and services for customers in Malaysia, Indonesia and Saudi Arabia (through SABB), and Islamic Investments and global wholesale Islamic financing/sukuk solutions (through HSBC Saudi Arabia),” the statement added.

[The Malaysian Reserve, 5 Oct 2012]