HSBC Exit: Blow or Blessing?

When HSBC announced it was selling off its retail banking arm in Sri Lanka to Nations Trust Bank, the shockwaves were immediate. Ordinary account holders panicked, credit card customers fretted, and social media lit up with cries of “foreign banks are abandoning us.”

But the truth is more complicated. Globally, HSBC has been trimming down businesses that don’t fit its new strategy. Sri Lanka is not being singled out—it’s part of a worldwide reshuffle.

For the government, the timing is awkward. Just as ratings agencies had upgraded Sri Lanka and the stock market was climbing, the headline of “HSBC pulling out” created the opposite mood. Critics pounced, saying this was proof that big international players have no faith in the country.

Behind the noise, the deal is actually a win for Nations Trust Bank. NTB gains around 200,000 new customers, beefs up its credit card empire, and positions itself as a bigger player among the local giants. In fact, banking profits and capital are at record highs, defaults are falling, and the Colombo Stock Exchange has been booming.

 On the street, it feels like a setback for the government’s image—even if the fundamentals don’t show collapse. It’s a perception problem more than an economic one. For AKD’s ministers, it means one thing: they’ll have to work double-time to convince people that foreign banks leaving isn’t a vote of no-confidence in the economy.