Indian PSBs Beat a Hasty Retreat from Hong Kong
(20 June 2022 – Hong Kong) Indian Public Sector Banks (PSBs) such as Union Bank of India and Punjab National Bank are shifting out of Hong Kong due to trade financing losses, increasingly stringent rules and tightening COVID restrictions.
Hong Kong has witnessed four PSBs exit out of eight public sector banks. The remaining entities are reviewing their operations after the COVID pandemic. State Bank of India (SBI) could end up as the only PSB in Hong Kong accompanying private Indian banks such as ICICI and HDFC. UBI has transferred clients to Singapore and Australian branches already while awaiting for the last no-dues certificate from the Hong Kong Monetary Authority (HKMA).
The Punjab National Bank has commenced a withdrawal plan while Canara Bank's plan to shut down its operations are in advanced stages. Bank of Baroda has already shut down its branch in the city and Indian Overseas Bank (IOB) is continuing to review the future of its Hong Kong branch
"Many Indian banks suffered major losses due to the COVID-linked economic meltdown in 2020 as traders could not pay up and there is also a thinking that so many banks are not required there now. The Chinese authorities are also not easy to deal with, especially in the current geopolitics of the region. But the main reason is the weak trade financing business as flows have been routed through Shanghai" a senior trade banker commented.
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