Barry O’Byrne, chief executive of HSBC’s International Wealth and Premier Banking unit, defended the move as part of a broader realignment of the bank’s priorities
HSBC’s Swiss private banking division has embarked on a sweeping disengagement from more than a thousand wealthy Middle Eastern clients, following mounting pressure from regulators over its handling of high-risk accounts. The move signals one of the most significant shifts in the bank’s private wealth strategy in recent years, as it attempts to safeguard its reputation while navigating heightened scrutiny from financial watchdogs.
The London-based lender is terminating its relationships with customers from countries including Saudi Arabia, Qatar, Lebanon and Egypt, many of whom hold assets exceeding $100m, according to individuals familiar with the development. Clients have already been notified that they will no longer have access to HSBC’s Swiss banking services and have been instructed to transfer their funds to alternative institutions over the coming months.
Barry O’Byrne, chief executive of HSBC’s International Wealth and Premier Banking unit, defended the move as part of a broader realignment of the bank’s priorities. “Switzerland plays a key role in how we support clients globally—particularly our core wealth hubs. Our strategy is to significantly grow our wealth business and we have been doing so successfully,” he stated. O’Byrne emphasised that the bank remains committed to serving both Middle Eastern and Swiss customers but is determined to apply rigorous standards to ensure best-in-class service.
The decision comes amid an intensifying crackdown by the Swiss financial regulator, Finma, which has repeatedly criticised HSBC’s vetting procedures for politically exposed persons (PEPs) and other high-risk clients. In 2024, the regulator barred HSBC’s Swiss private bank from onboarding prominent public figures after ruling that it had breached anti-money laundering (AML) legislation. Investigations revealed that the bank had failed to conduct sufficient due diligence on transactions totalling more than $300m between Lebanon and Switzerland between 2002 and 2015.
Finma’s inquiry concluded that HSBC had ignored clear warning signs of possible money laundering, failed to comply with basic AML requirements, and allowed politically sensitive individuals to operate accounts without adequate oversight. As a result, the watchdog imposed strict measures on the bank, including a prohibition on establishing new relationships with PEPs until comprehensive reviews had been completed. Clients with assets above SFr100m ($124.7m) were also designated as “high risk”, mandating enhanced scrutiny of their financial activities.
The latest measures, which were first reported by Bloomberg, demonstrate HSBC’s attempt to rebuild trust with regulators and distance itself from legacy practices that left it vulnerable to reputational damage. A person familiar with the matter noted that the cull of Middle Eastern clients is intended to streamline operations while reducing compliance risks associated with jurisdictions perceived as higher risk.
The issue is not confined to Switzerland. Last month, HSBC disclosed that authorities in France and Switzerland were investigating alleged money laundering offences linked to two historical banking relationships. While the details remain undisclosed, the probes underscore the transnational dimension of the challenges HSBC faces.
For years, HSBC has sought to balance its ambitions as a global wealth manager with the heightened obligations of regulatory compliance. Switzerland has historically served as a cornerstone of that strategy, offering discretion and expertise for ultra-high-net-worth individuals. However, the shift in the regulatory climate, combined with the growing emphasis on transparency in global finance, has forced the bank to reassess long-standing practices.
Industry analysts suggest that the latest restructuring may also reflect commercial considerations. By tightening its client base, HSBC is better positioned to concentrate on markets where it can deliver growth without courting regulatory controversy. “This is not only about compliance—it is about profitability and risk-adjusted returns,” one analyst noted. “Managing PEPs and clients from volatile regions is extremely costly in terms of compliance resources. If regulators are tightening the noose, the economics may no longer stack up.”
For clients, however, the abrupt severance poses significant challenges. Many ultra-wealthy families in the Middle East have historically relied on Swiss banks not only for asset management but also for intergenerational wealth planning and cross-border financial structuring. The termination of these relationships forces them to seek new banking partners at a time when scrutiny of offshore wealth is intensifying across the globe.
The development also raises broader questions about Switzerland’s traditional role as a hub for global wealth. Long prized for its secrecy and discretion, the country has been steadily rebranded under international pressure to strengthen its anti-money laundering framework. The actions against HSBC suggest that regulators are increasingly unwilling to tolerate deficiencies, even from institutions of global stature.
HSBC’s decision, while painful for some of its most lucrative clients, illustrates the recalibration of private banking in an era where regulatory compliance and reputational risk carry as much weight as client loyalty and profitability. For the bank, the hope is that pruning controversial relationships will reinforce its credibility with regulators and investors, while allowing it to focus on expanding in safer, more transparent markets.
Yet for the financial industry more broadly, the episode serves as a reminder that the pressure on banks to act as gatekeepers in the global fight against illicit finance is only set to intensify. Institutions once known for their discretion are being pushed to adopt unprecedented levels of transparency, and those that fail to adapt risk both financial penalties and lasting damage to their reputations.
As HSBC navigates this turbulent transition, the future of its Swiss private banking arm will hinge not only on its ability to grow but on its willingness to embrace a culture of compliance that regulators demand and clients are increasingly coming to expect.
