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In a sudden development, Hong Kong and Shanghai Banking Corporation Ltd said that it will discontinue its retail broking and retail depository services in India. The two units were operated under HSBC InvestDirect Securities (India) Ltd (HISL).
The move, according to a company source, will result in loss of about 300 jobs. HSBC employs about 30,000 people in India.
“Impacted employees will be offered a fair and equitable severance pay, in line with the company policy and career transition services will be extended through a professional agency,” HSBC said in a statement.
The company said it will stop opening new retail broking accounts with immediate effect.
The foreign bank said that it will notify existing clients of the date of discontinuation of its retail broking and depository services, but continue to provide them with retail broking services until then.
Time for migration
While it will allow buying and selling of securities till November 22, only selling would be entertained between November 25 and December 3. Depository holders have been given time till December 3 to migrate to other depositories while for mutual fund holders, the last date is November 18.
According to market experts, the time given to migrate to other brokers/depositories is too little. “Customers will find it difficult to shift to other broking houses before December 3 which is less than two months,” said an expert.
“Opening of an account itself will take a minimum of three to four days, that too if all the records are perfect,” he said.
More confusion will arise while changing the depository account. “A customer of CDSL cannot have NSDL ID and vice versa. So, that will force them to square off their current holdings in HSBC and buy elsewhere, resulting in additional unnecessary costs,” he added.
UK banking major HSBC had acquired IL&FS Investsmart for over Rs 1,000 crore in 2008 from E*TRADE Mauritius and IL&FS. IL&FS Investsmart, promoted by IL&FS, was established in 1997.
Subsequently, it came out with an open offer and delisted the company from the exchanges.
Broking houses have been facing difficulty in sustaining the business in the last few years following the collapse of Lehman Brothers in 2008.
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