More than 130 customers a day are switching away from HSBC — more than from any other bank — amid growing anger about its failure to pull out of Russia.
MPs have urged the bank to stop operating under Putin’s regime. Other banks have started winding down their business. Last month HSBC said it had about 220 staff in Russia. Its website says: “HSBC provides a wide range of corporate banking, investment banking and financial markets products and services to multinational and domestic corporate and institutional customers in Russia.”
Kevin Hollinrake, a Conservative MP and chairman of the parliamentary group on fair business banking, said: “I have spoken to HSBC about its continued presence in Russia, which cannot be justified. I very much hope that the clear commercial and moral reasons will lead the bank to immediately terminate its interests there.”
Russia has not been the only problem for the FTSE 100 company that is one of the largest banks in the world. It came under fire from MPs last year for “aiding and abetting” China’s crackdown on free speech in Hong Kong. It was fined almost $2 billion in 2012 by United States authorities for failing to stop money laundering by Mexican drug barons. Its decision last year to start charging charities and community groups for banking services has also been unpopular. Voluntary groups now have to pay fees of £5 a month, 40p for every cheque they need to cash and 0.4 per cent to make cash deposits, the same charges applied to bigger charities with turnovers of up to £2 million.
HSBC, which started out as the Hong Kong and Shanghai Banking Corporation, took over Midland Bank in 1992 and now has about 14.75 million customers in the UK. It operates in 64 countries and serves about 40 million customers worldwide. It has 187,000 shareholders in 128 countries.
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Lloyds, NatWest and Santander do not operate in Russia. Barclays said it has very limited direct exposure to the country. Citi, Deutsche Bank, Goldman Sachs and JP Morgan, the investment banks, have started winding down their business there.
HSBC had the second worse customer satisfaction rating in a survey by the consumer group Which? Only Royal Bank of Scotland’s score was lower.
A net 57,982 customers left HSBC between October 2020 and January this year, according to the Current Account Switch Service, a government-backed scheme. TSB had a net fall of 51,409 customers, Santander lost 46,068, NatWest 24,111 and Barclays was down by 21,744 customers.
The biggest gainers were Starling, Lloyds, Monzo and Nationwide.
What are the alternatives?
The best current account for you will depend on how you use your bank. In some cases it may be worth paying for an account.
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Santander’s 123 Lite account costs £2 a month. It pays up to 3 per cent cashback on water bills, 2 per cent on energy and 1 per cent on a Santander mortgage, council tax and some other bills. The maximum cashback is £15 a month. You have to pay in at least £500 to the account from your salary.
The Halifax Reward account gives you £5 a month when you pay in at least £1,500 and remain in credit — you are charged £3 if you fail to pay in this much. You have to spend at least £500 on your debit card linked to the account or keep £5,000 in it earning no interest.
Banks are competing for new customers with cash incentives. NatWest is offering a £150 joining bonus and Nationwide is offering £125.
Many banks offer travel insurance for a monthly fee. This can be particularly attractive to older customers who can struggle to get affordable cover.
Nationwide’s Flex Plus account, which costs £13 month, offers family worldwide travel cover. There are additional costs if you are over 70. You also get mobile and motor breakdown cover. There are no fees for overseas cash withdrawals or purchases.
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Another popular challenger bank is Triodos, which focuses on being ethical. It claims to invest only in certain renewable energy and socially responsible projects. It charges £3 a month and has a relatively low arranged overdraft interest rate of 18 per cent.
Can I move my investments?
Most banks offer readymade stocks and shares portfolios. These offer access to a wide range of products to suit your risk profile and timeframe.
HSBC offers five funds costing between 0.18 per cent and 0.87 per cent in annual fees with a 0.25 per cent platform charge on top. You can though one of the bank’s advisers, which costs 0.5 per cent of the amount you want to invest.
An alternative to banks is a so-called robo advice service, such as Nutmeg or Wealthify. Nutmeg charges an all- inclusive fee of between 0.72 per cent and 1.02 per cent for its funds. Wealthify charges 0.76 per cent to 1.3 per cent.
HSBC also offers tracker funds that follow a market index such as the FTSE 100 or S&P 500. You can invest in them directly via the bank or through investment platforms such as Interactive Investor, Hargreaves Lansdown and AJ Bell. The HSBC FTSE 100 tracker costs 0.09 per cent on top of the platform charge. A cheaper alternative from Vanguard charges 0.06 per cent for an almost identical product.
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Bear in mind that HSBC is the fifth largest firm in the FTSE 100 index, so you will be buying its shares indirectly through any fund that tracks the index.
How to switch
The current account switch guarantee service ensures that the bank you want to switch to does all the leg work. Any payments sent to your old account will indefinitely be redirected to your new one. If there are any problems as a result of the switch, your new bank will be liable. Your new bank will transfer all your regular incoming and outgoing payments and any balance. Your saved payee details for internet and telephone banking will also be transferred.
Moving investments
If you transfer funds without cashing them in first you could be charged a fee. Contact the company to which you wish to transfer and it will start the process. Cash transfers should take a couple of weeks, transfers of shares four to six weeks and transfer of funds six to eight weeks. You may face delays if you are invested in a version of a fund that is not available on another platform.
HSBC said: “We are not accepting new business or customers in Russia. We are implementing the sanctions imposed across our whole business. We do not have any retail operations, customers, or branches in Russia. We are focused on helping our multinational corporate clients manage the changes they need to make in accordance with regulatory requirements.”
‘I decided I would make the bank pay in an unusual way’
Norman Burrow has been with HSBC since 1962, when it was Midland Bank (Ali Hussain writes). But he stopped using his current account 13 years ago because he said it failed to tell him about its currency exchange fees while he was working in Oman. He had opened an HSBC account in Oman in the hope that he would not be charged to use his card there or in Europe, where he travelled. He said that the fees for foreign exchanges were not made clear to him.
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Burrow decided to take his revenge by keeping his account open for 13 years with no activity — thus forcing the bank to cover the admin costs of running an account with no chance of gain. He left £100 in it so that the bank couldn’t close it down. The 77-year-old retired university pro-vice chancellor from Preston said this was “punishment” for his treatment. “The bank sends me printed statements, which costs it money and identical ones to my wife in a separate envelope, as it’s a joint account.”
Burrow also has a Nationwide Flex Plus current account, which costs £13 a month and offers fee-free foreign currency exchange.
