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* Closure expected to be completed by Q1 2016
* Private banking unit in India employed about 70people-source
* Morgan Stanley, RBS recently exited India private banking (Adds details on HSBC India private banking business, context)
By Sumeet Chatterjee
MUMBAI, Nov 27 (Reuters) - HSBC Holdings Plc isclosing its private banking unit in India as part of its groupstrategy, the bank said, marking the exit of another foreignbank from the cut-throat wealth management business in Asia'sthird-largest economy.
The bank would offer private banking clients the choice tomove to HSBC Premier, the bank's global retail banking andwealth management platform, a Mumbai-based spokesman said. Theprocess is likely to be completed in the first quarter of 2016.
"After a strategic review of the global private bankingoperations in India, we have decided to close the business," thespokesman said. "This marks further progress in the HSBC groupstrategy to simplify business and deliver sustainable growth."
Many foreign wealth managers scrambled to open up shop inIndia a few years ago lured by its long-term growth prospects.
Even though India has been minting millionaires at a strongpace, it has failed to translate into profits for the foreignwealth managers that have set up teams of well-paid bankers tohelp manage those riches.
Banks including Royal Bank of Scotland and MorganStanley have recently sold their onshore India privatebanking units as part of their global business restructuring.
HSBC's private banking business in India has about 70 staff,a source with direct knowledge of the development said, addingmany of them would be redeployed to other bank operations.
The bank employs about 32,000 people - many of them in itsback-office outsourcing unit - in India, where it also offerscorporate, retail and investment banking services.
The value of assets managed by HSBC's private banking unitin India was not immediately clear, but wealth managementindustry sources said the bank was not one of the top threeplayers in the segment.
The bank posted pre-tax profit of $7 million in its Indiaprivate banking business in the six months to June, accountingfor 4.5 percent of the Asia private banking business and up from$5 million in the same period a year ago.
HSBC, Europe's biggest lender, did not immediately respondto a Reuters request for comment on its private banking staff inIndia and its market position.
HSBC private banking in India lacked scale and closing itties in with a review the bank is undertaking of operationsaround the world - selling or closing units where it lacks scaleor the businesses are unprofitable, people familiar with themove said.
HSBC's decision to exit India private banking business comesat a time when India's homegrown wealth managers are hiring morestaff and expanding in smaller cities, seeking to attract risingnumbers of new millionaires.
These local firms already control some 75 percent of themarket, industry executives say, and their expansion plans willput more pressure on the global banks, which are struggling withhigher wages and compliance costs, and a narrower client base.
India taxmen in February searched the local headquarters ofHSBC as part of a probe related to allegations that the bank'sSwiss business helped clients dodge taxes. The move came afterdetails of its Swiss private banking operations and top clientswere widely published in the media. (Reporting by Sumeet Chatterjee; Additional reporting by SteveSlater in LONDON and Saeed Azhar in SINGAPORE; Editing by MiralFahmy, Muralikumar Anantharaman and Adrian Croft)
