HSBC has become the latest international lender to pull the plug on its retail operations in Russia, as foreign banks struggle to crack the dominance of the country’s state-backed giants.
The London-based bank’s exit follows that of Barclays, which quit its Russian retail banking operation last month.
Barclay’s boss Bob Diamond said at the time his bank was “unable to compete” in Russia.
HSBC said it would close its retail business and reduce its private banking presence to a representative office, following a strategic review of its operations in the country.
Russian chief executive Huseyin Ozkaya said: “It’s clear that the strongest opportunity for HSBC in Russia lies in servicing corporate and institutional clients.
He added: “This enables HSBC to better support clients who are trading and investing internationally and require access to our extensive global network.”
The bank had four branches in Moscow and one affiliate branch in St Petersburg, and will now focus on its investment banking operations in the country.
State-owned banks control around 65 per cent of Russia’s top-100 banks’ assets, according to estimates, with Sberbank accounting for almost 50 per cent of deposits in the banking system.
Foreign banks operating in the country have struggled to emulate Citigroup, whose heavily promoted Citigold service has outperformed competitors.
Citi gained a foothold in the Russian market due to its early entry, having first established a Moscow presence in 1993. It now has more than 55 retail branches in about a dozen cities.
INTERNATIONAL BANKS IN RUSSIA
● The latest international bank to quit its Russian retail operations, with a shift away from private banking to corporate work.
● Pulled the plug on its retail operations earlier this year, having struggled since it entered the market just before the financial crash.
● Bought Moscow-based lender Rosbank in 2008. Has 16,000 employees in Russia - more than in any country outside of France.
● Perhaps the only international player to have cracked Russia. It has become one of the country’s biggest banks since its 1993 entry.
● The Italian lender is doing well in Russia. It bought International Moscow Bank in 2007 and now has more than 100 branches.
● Sold its mortgage unit last year to Russian Orient Express bank after the financial crash hit the country’s construction sector hard.
● Exited Russia in December, also selling to Orient Express. The Spanish bank had also faced tough competition from local lenders.