HSBC makes a big thing of small business

Today HSBC UAE has significantly expanded its SME client base in the Emirates, and its business model is being used as best practice in other parts of the HSBC Group.

'By the end of the year we should have rolled out our SME services in Oman, Bahrain and Qatar,' says Hamid Chinoy, Senior Manager Business Banking UAE, who has pioneered the scheme from its conception in mid-2002.

'Historically we had offered an unorganized set of services to SMEs, and the bank tended to ignore them for two reasons: first they were small and not very profitable for the bank; and secondly SMEs tended to have a weaker credit profile.'

'In mid-2002 the bank realized it was missing a trick and we launched a new deal for SMEs in January 2003. We spent a lot of time researching and studying what SMEs wanted from their banking, and came up with a dedicated unit for them within the bank.'

This Business Banking unit has proven a big success within HSBC in the UAE with very sizeable annual growth since its launch. Staff numbers in the division have also grown to keep pace with the customer base.

'We apply a credit limit and turnover cut-off for SME businesses, bearing in mind complexity of their financial needs; above that and our clients graduate to another area of the bank,' says Mr. Chinoy.

'Our clients range from retail shops to trading companies and small manufacturers. It is a real cross-section of the thriving UAE business community, and we are already seeing clients whose financial needs have grown more complex, moving up to our large business division within the bank.'

So what does HSBC offer that so many SMEs have embraced? Aside from a dedicated unit of the bank for SMEs, the services span routine banking, payments, remittances, Net banking and trade services.

'For many small enterprises the HSBC brand is also useful to them in doing business,' says Mr. Chinoy. 'An HSBC letter of credit for trade, for instance, is instantly recognized around the world.'

Perhaps this is why HSBC has been successful in attracting many new companies on a monthly basis as well as growing its business with existing clients.

Up until now HSBC has been kept busy enough dealing with incoming business, but the group is now actively promoting its SME services. This new column on AME Info is part of that effort to win hearts and minds in the sector, and to provide an additional useful source of information to SMEs about banking services.

'SMEs account for about 80% of the UAE's business economy, and we are delighted that our model has proved successful and has been chosen for adoption in other parts of the HSBC Group', says Mr. Chinoy. 'My main job now is to roll-out SME banking around the region.'