THE SCOOP
The big one
HSBC Holdings is one of the largest financial services firms in the
world. Headquartered in London, the global banking group has
about 9,500 and more than 310,000 employees throughout Europe,
North and South America, Asia, Africa and the Middle East.
HSBC was established as the international and uniform brand name in
order to better promote the banking group as a whole in 1999.
However, with a truly international presence and established local
presence in so many countries, HSBC took its internationalism a
step further in 2002 by marketing itself as "the world's local
bank," an approach that's still taken by the firm.
HSBC's largest and most-recognised subsidiaries include HSBC Bank
plc in the UK, HSBC France, Hang Sent Bank Limited in Hong Kong,
Household International and HSBC Bank USA N.A. in the United
States, and HSBC Private Banking Holdings (Suisse) S.A. in
Switzerland, Hong Kong SAR, Monaco, Luxembourg, Singapore, the
Channel Islands and the UK.
In addition to being known throughout the world for its size, HSBC
has also earned a reputation for being a well-run
organisation. While many other large banking groups have
struggled in the midst of the worldwide financial crisis that began
in 2007, HSBC has remained relatively (though not completely)
unscathed. It has not had to take any government bailout
money, remaining one of the better capitalised banks in the
world.
A storied history
HSBC's origins stretch back to the mid-19th Century, when Thomas
Sutherland, the Hong Kong Superintendent of the Peninsular and the
Oriental Steam Navigation Company identified a need for local
banking branches both in Hong Kong and along the Chinese coast. The
Hong Kong and Shanghai Banking Corporation Limited was founded in
1865, and opened offices in both Shanghai and London. And, over the
coming decades and then century, the bank opened branches
throughout China, Southeast Asia, and the Indian subcontinent, also
further expanding in Europe and North America.
Almost a century into its existence, in 1959 the Hong Kong and
Shanghai Banking Corporation acquired the British Bank of the
Middle East, which was originally known as the Imperial Bank of
Persia and had a number of operations in the Gulf Arab states, as
well as the Mercantile Bank, which had banking operations in India
and South East Asia. In 1965, six years after purchasing the two
banks, the Hong Kong and Shanghai Banking Corporation bought a
controlling interest in the Hang Seng Bank, which had already been
based in Hong Kong since 1933.
Through the rest of the 1960s, 1970s, and 1980s, the now banking
giant continued its proven-successful strategy of moving into new
markets. In 1981, it established the Hong Kong Bank of Canada, and
in 1986, established the Hong Kong Bank of Australia. The following
year in the USA, in 1987, the Hong Kong and Shanghai Bank holdings
acquired the New York-based Marine Midland bank, further
strengthening the massive group's US operations. By this point the
group had a global constellation of operations which really needed
to sit unified under one umbrella. In 1991, the international
'constellation' of banks and companies owned by Hong Kong and
Shanghai Bank were brought together under the single ownership and
control of the newly created umbrella banking holding company HSBC
Holdings, under which business and operations have remained
since.
True to its word
One month after HSBC told the world that
its focus on Asian (as well as Middle Eastern and European) markets
would keep it afloat in troubling economic times, the firm was
deemed the successful bidder in a government auction to acquire The
Chinese Bank in Taiwan. The bank, of which the Taiwan government
has had control since January 2007, had US$3.1 billion in assets as
of September 2007. HSBC assumed the bank's assets and liabilities
in exchange for Taiwanese government funds, which reportedly amount
to US$1.5 billion. In addition, HSBC will provide additional
capital, estimated to be between US$300 million and US$400
million.
Reporting on HSBC's acquisition, The New
York Times said, "HSBC, which followed global rivals Citigroup,
Standard Chartered and ABN AMRO to acquire a Taiwan bank, will
focus on expanding two competitive but profitable businesses:
wealth management and small-medium enterprises investing in China."
Under the terms of the deal, HSBC is required to establish a local
subsidiary within three years of completion or one year after
HSBC's total assets in Taiwan exceed US$13.9 billion, whichever is
earlier. The new company will have a minimum capitalization of
approximately US$309 million.
Greenest of them all
In the midst of subprime misery, HSBC
received a feel-good honor in January 2008, when it was marked as
the top-ranked environmentally conscious bank. The firm nudged out
ABN Amro, Barclays, HBOS and Deutsche Bank, as well as U.S.
powerhouses Citi and Bank of America. The ranking was performed by
Ceres, an environmental group that urges companies to address
climate change. HSBC has been carbon neutral since 2005.
Previously, in May 2007, HSBC had
spearheaded a five-year, US$100 million partnership to respond to
the urgent threat of climate change worldwide. The firm was joined
in the coalition by The Climate Group, Earthwatch Institute,
Smithsonian Tropical Research Institute and WWF. The
partnership-which involved the largest donations to each of these
charities and the largest donation ever made by a British company-
has significant program targets and offers transformational support
for the environmental charities. The donation will help to deliver
increased capacity, help the charities to expand across new
countries and research sites, and increase their access to more
people.
Profits halved
Having witnessed one of the worst downturns
in the global economy since before World War II, HSBC was lucky to
come out with what on the surface appeared to be pretty healthy
profits of $9.3 billion before tax for 2008. Put into context,
however, these profits were 62 percent lower than 2007 figures. But
the bank can hold its head high that it did not have to rely on
government handouts to stay afloat. And while pretax profit was
down in North America by a whopping 169 per cent, in Asia and in
Hong Kong, profits were up. By the end of fiscal 2008, operations
in Hong Kong reported profits that were 58 percent higher versus
2007 figures to US$5.5 billion, while the rest of Asia posted
profits of US$6.5 billion, 69.5 percent higher than the previous
year.