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Island client among small businesses cut loose by HSBC

Genevieve Grant didn’t need a letter from HSBC Bank Canada to tell her that her business was no longer wanted. She heard it first hand. The co-founder of Victoria-based Pacific Allergy Group, which sells allergy medication online to the U.S.
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While HSBC has been letting some clients go, other banks say they have been kept busy filling the gap.

Genevieve Grant didn’t need a letter from HSBC Bank Canada to tell her that her business was no longer wanted. She heard it first hand.

The co-founder of Victoria-based Pacific Allergy Group, which sells allergy medication online to the U.S., was told her business wasn’t big enough for the bank to bother with it.

Grant said six weeks ago, after four years with HSBC, she went in to apply for a company credit card and order cheques as the business had grown significantly and they had to adapt.

The bank’s answer — no.

“They said ‘you don’t have enough money in your account’ and it was quite a large number, something like $100,000, before they would even talk to us about getting a company credit card,” she said. “They would do nothing.

“It was odd that you’re in this bank that’s holding your money and you’re plugging away and they have zero interest in helping you succeed and become the kind of company that warrants their attention.”

Grant moved her business across the street to Royal Bank.

“They were amazing and walked us through everything we needed,” she said.

Grant is not alone. HSBC sent out letters to certain small business clients around North America notifying them their accounts would be cancelled and they would have 60 days to move their accounts to other financial institutions.

Attempts to contact HSBC were unsuccessful, but the bank defended its actions in an emailed statement to the Vancouver Sun in which Nigel Davis, senior vice-president of business banking for HSBC Bank Canada, said the bank was shifting its focus to small businesses that export or want to grow internationally.

The move to close accounts and defend the action is both disappointing and shortsighted, said commercial banking expert Mike Thompson, who spent 25 years in banking before becoming a business professor at Royal Roads University.

“The average business owner needs all of the support they can get from the banks. I’m sure there’s a lot of business people feeling very vulnerable right now,” he said. “HSBC is failing to recognize the importance of the small-business sector — it’s a huge driver of the economy.”

Thompson said that with the decision, HSBC is also cutting itself out of a potentially huge opportunity as Baby Boomers who own small businesses are starting to look for an exit strategy.

“There will be a huge transfer of wealth going on. When they sell, there will be proceeds from the transaction and you would normally invest those with your friendly banker,” he said.

Thompson also takes issue with HSBC’s decision to focus on international business.

“If they think they will pick up a whole bunch of new business in Canada, I think they are wrong. The other major banks also offer great services, they are in that game and will zealously guard their big clients,” he said. “I don’t think HSBC has thought it through.”

But the competition has, said Wayne Berg, Coast Capital Savings’ chief commercial officer. “Small business has been and continues to be a strong market for us — 50,000 of our members are business clients and a large majority of which are small businesses,” he said. “We have been putting increased resources toward growing that sector.”

Coast Capital plans to increase its staffing by 50 per cent over the next three years. Berg said much of that increased staff will be used in small business and commercial banking. “Small business has very strong affinity for credit unions, traditionally,” he said, noting credit unions have a local focus, and credit and loan decisions are made in the community.

The “big guys” also see HSBC leaving the small- business marketplace as an opportunity.

Sim Mehanger, vice president of small business for Bank of Montreal, said they are reinforcing their strategy to commit to the small business segment.

“We look at small business as such a huge opportunity given that 98 per cent of all businesses in B.C. are small businesses. We want to invest heavily in this segment versus distancing ourselves,” she said. The bank is running a promotion offering time-limited free or reduced banking costs for new business clients.

Mehanger said they have already seen many business owners, often carrying the letters from HSBC, in their branches.

“When something this drastic happens it’s an opportunity to reinforce our message that we are here to help customers and provide simple solutions,” she said.

aduffy@timescolonist.com