International banking giant HSBC is turning its back on small, local customers - suddenly cutting off the lines of credit for at least three Kelowna-area families.
Calvin Kuipers is the owner and operator of a vineyard and an agritourism RV park on McCulloch Road in Kelowna.
He has two lines of credit, one for each business, with a total balance close to $300,000. He said he was completely taken by surprise when he received a letter from HSBC saying his account had to be paid in full by July 28.
"We have a six-acre vineyard that I've actually thought about selling," he said. The letter he received was dated June 27, but he only received it on July 4, giving him three weeks to pay back the full amount.
"It's just kind of bizarre that they would cut us off," he said. "We've done so much work to make it beautiful and appealing out there. My wife and I aren't the type to sell everything and leave town, but we've thought about it," he joked. HSBC did not call or send an email, just the letter.
"When I called them for an explanation, they just read me the letter they had already sent me."
Calvin has begun the process of applying with Canada Farm Credit because his businesses are agricultural and agritourism. He has no idea if they will accept him or be able to get him sufficient funding by July 28 to settle up with HSBC. He hopes to hear back by Monday, July 14.
Laurie Baird at Verico Complete Mortgage Services said that she has seen this happening with business accounts at HSBC before.
"The clients, depending on the situation could be in a lot of financial trouble because what they may have been approved for through HSBC a few years ago, may not be available on the market today," she said. "I am involved in the placement of mortgages and line of credit and many of my deals that I could easily do last year are not easy to place now."
Calvin's brother, Karl Kuipers, said that he received the same letter from HSBC, dated June 27. It said that his line of credit would be closed July 28. All fees and money owed to the bank would be due by July 28 and any money that had been deposited in the account would be returned.
Karl and his wife Julie owned Jack's Neighbourhood Grill for 12 years until it closed and had a line of credit with HSBC at that time. They also built a house 12 years ago and have since paid the line of credit off.
Now the pair are retired and only use the line of credit for travel. They occasionally spend a few thousand dollars on it and then pay it back when they return from their trips. "We liked HSBC because they have branches all over the world, it was super convenient," Kuipers said.
They're long-term customers that are not behind on their payments.
Karl said he thought they received the letter because they have been submitting zero tax returns for the past couple of years. But after speaking with his brother and sister - both of whom have businesses and actively use lines of credit in their operations - he realized all three of them had received the same letter.
"My wife and I are the least affected, we're retired" he said. "[My brother and sister] are both gainfully employed, but they got the letter too."
Karl and Calvin's sister Sylvia Root has apparently also received the same letter, but could not be reached for comment.
All of this comes several months after HSBC announced that it is focusing on international business profiles instead of local companies. Richard Truscott, director of the Canadian Federation of Independent Business said that many of their members across Canada have been receiving the letter from HSBC.
"We were told by HSBC that those businesses would get 60 days notice to make alternative arrangements," he said. "One month is not enough time to transfer such a major and important part of their business to a new provider."
One of his worries was that a small business, when switching providers under these time constraints, might be willing to take an offer from another bank that doesn't truly take care of their needs.
"These relationships are really important for any entrepreneur. Like any relationship, you have to learn about each other, find out what the needs are, do the transfer of information - banks, like government, move at a glacial pace."
Assistant vice president of public affairs at HSBC Sharon Wilks said she couldn't comment on these specific cases.
"One of the decisions we have made as a global organization is to make sure that every business has a relationship manager and that just can't be done economically with that number of small business accounts," she said.
"This doesn't sound like that situation. All the letters regarding that initiative went out some time ago and most of those accounts have already been closed. And, it did not impact borrowing clients."
Wilks added that there are many reasons that HSBC might close an account, all based on the original terms of each account.
"It could be a 'demand loan' in which case the terms of the original agreement would be that we could demand payment at any time. That's just one possible loan we do, not all are like that - just a possibility."
Karl Kuipers said HSBC appears to want to keep his Mastercard business, but he is now pulling that as well.
As for Calvin, it's fingers-crossed that new arrangements can be made in time, or that HSBC grants him some sort of extension.
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