British financial giant HSBC said it will be shutting its struggling retail brokerage and depository business in the country, five years after it entered the segment by pumping in over $290 million.
Nearly 300 employees of the company stand to lose their jobs due to the decision, according to sources.
"We are discontinuing its retail broking and retail depository services business here, operated under HSBC InvestDirect Securities," HSBC India said in a statement.
"Impacted employees will be offered a fair and equitable severance pay in line with HSBC policy, and career transition services will be extended through a professional agency," the statement said.
Following the winding down decision, the bank said there will no new client additions with immediate effect, while existing clients will be informed of a date of discontinuation and will continue to offer the services till the shutdown.
HSBC India entered the retail brokerage business in May 2008 - only months ahead of the financial crisis - by acquiring a 73.21 per cent stake in IL&FS Investsmart for $241.6 million.
This was followed by an open offer, which took up the stake to over 93 per cent, taking total investment to $296.4 million. It had subsequently delisted the company.
The move comes after a review of businesses as announced by the group chief executive in May 2011, it said.
Brokerages have not been doing well for the last few years due to high volatility in the market and after competition squeezed commissions. HSBC was no different, according to people in the know.
According to sources, nearly 300 staff members at its 30 branches will be impacted because of the move.
The statement, however, said that the company remains committed to this market, where it employs over 30,000 at the group level.
HSBC will continue to invest in its other businesses like retail banking and wealth management, commercial banking, investment banking and capital markets, institutional broking, asset management and insurance services, the statement said.