Exclusive HSBC to take 1-3 years to wind down commercial banking in Sarawak

by **Cals** Thu 01 May 2014, 01:49

Exclusive HSBC to take 1-3 years to wind down commercial banking in Sarawak

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Wednesday, 30 April 2014 18:47

KUALA LUMPUR (Apr 30): HSBC Malaysia said it will not close down or reduce its branches in Sarawak, but it will take one to three years to ‘wind down’ its commercial banking operations in that state.

In an email statement to theedgemalaysia.com today, Malaysia’s largest foreign bank said its five branches in Sarawak will continue to open its doors and it will remain active in retail banking and wealth management.

HSBC Malaysia could be the first foreign bank to scale down its operations in Sarawak — a thriving state abuzz with economic activities brought about by the implementation of many government projects.

Observers believe the winding down has got to do with constant international pressure on the bank to withdraw support for politically-linked businesses.

Earlier this week, HSBC Malaysia said it would “wind down” its commercial banking operations in Sarawak but today it clarified that ‘winding down’ does not mean a reduction or closing down of its branches.

“It is a wind down because it is a process that will take place in phases over one to three years,” HSBC said today, in response to questions from this writer.

“Malaysia remains an important market to HSBC and we will continue to invest in our people, network and businesses while upholding the highest banking standards,” the bank said.

HSBC said it decided to "wind down" its commercial banking business in the state due to "commercial reasons", following online reports that it has withdrawn support to firms linked to Sarawak’s former powerful chief minister.

In recent months, HSBC has come under severe criticisms by international non-governmental organisations for allegedly having financed logging and politically-linked business activities, seen to go against the basic tenet of its business philosophy.

Indeed, the bank has said it systematically screens its businesses via a strategic assessment, encompassing a range of commercial criteria, including "openness" and "transparency" of the business environment.

Many banking observers believe that the winding down of HSBC’s commercial banking in Sawarak has to be linked to scrutiny by NGOs rather than pure commercial reasons as economic development of this Eastern Malaysian state is huge.

The Taib regime had come under heavy attack by local and international activists for a range of reportedly dictatorial and unlawful activities.

On March 3 this year, The Edge Weekly reported that Taib Mahmud, who had just stepped down as Sarawak chief minister then, had led the state imperiously for 33 years; and during these years, his family members had amassed billions of ringgit of wealth.

Ruling with a tight fist, Taib had allowed his immediate and extended families to control 400 companies in every sector in Malaysia and hold overseas assets worth more than RM800 million in four countries.

Following these reports on HSBC, share price of Cahya Mata Sarawak Bhd (CMSB) fell this week.

This flagship company of Taib’s family today lost 34 sen or 3.4% to end at RM9.54, on trades of some 1.2 million shares after hitting an intraday low of RM9.46.