At a Glance
"Committed to a good work/life balance"
"Better known in the Europe than the U.S."
"Don't hear much about them in the US"
"Strong in Canada"
"Not really a major player"
About HSBC North America Holdings
North American arm
As its name implies, HSBC North America Holdings contains the U.S. and Canadian businesses of London-based HSBC (the name's an acronym of its predecessor, the Hongkong and Shanghai Banking Corporation, which remains part of HSBC's global business and the largest bank in Hong Kong).
With $580 billion in assets, the North American group includes HSBC USA, HSBC Canada and the HSBC Finance Corporation, which provides retail banking, credit cards, lending, insurance and other consumer services. In the U.S., HSBC's business lines are commercial banking, personal financial services, private banking and global banking and markets. The vast majority of its 460-plus branches are in New York state, but others can be found in Connecticut, New Jersey, Maryland, Delaware, Illinois, Oregon, Washington State, California, Florida, Virginia and Washington, D.C.
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-recognized subsidiaries include HSBC Bank plc in the U.K., 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 U.K.
In addition to being known throughout the world for its size, HSBC has also earned a reputation for being a well-run organization. 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 capitalized banks in the world.
Change of address
In 2006, HSBC North America announced plans to relocate its corporate headquarters from suburban Prospect Heights, Ill., to the village of Mettawa, about 13 miles north. Construction began on a new 440,000 square-foot campus and occupancy started in early 2008, with nearly 2,400 employees installed by summer's end. The building, which can accommodate up to 3,000 people, is intended to "support our continued growth plans while offering the greatest convenience for the overwhelming majority of our Chicagoland employees, according to executive vice president Steve Gonabe. By all appearances, HSBC is preparing to stay at its new headquarters facility for quite some time—it's leasing the space for 13 years, with an option to renew for up to 30 years.
How the CEO got his job
HSBC North America CEO Brendan McDonagh hasn't been at the top for long - he started his job in February 2008, following the ouster of former chief Bobby Mehta. The cause of Mehta's troubles was fallout from HSBC Finance Corporation's exposure to the U.S. subprime market; HSBC was one of the first banks to be hit by the crisis, thanks (or no thanks) to the 2003 acquisition of mega-lender Household International, which became HSBC Finance Corporation after the $14.2 billion transaction was complete. Also booted in the housecleaning was HSBC Bank USA executive Sandy Derickson, who had been vice chairman of HSBC Finance.
McDonagh's no stranger to HSBC, though. Before assuming the top spot he had served as chief operating officer of the bank's North American consumer finance business.
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 sub-continent, 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 60s, 70s, 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.
In July 2000, HSBC kicked off the millennium by paying a US$11 billion dollars for French banking group Crédit Commercial de France (CCF). The acquisition of CCF, which was established in 1894, gave HSBC a network of 650 branches in France and prompted HSBC to list on the Paris Stock Exchange (now Paris Euronext). In 2003, HSBC opened its brand new European headquarters to 8,000 staff, with its Canary Wharf office in London. The following year, 2004, marked a significant year in the history of HSBC's European operations, as it continued to grow through strategic acquisitions - one of its largest purchases was the financial services arm of the Marks and Spencer Group. The same year, HSBC's French business, CCF, increased its stake in the French private bank Banque Eurofin S.A to a domineering 84 percent. In 2005, celebrating 140 years in business in China, HSBC significantly increased its business in the Chinese market, particularly in the areas of insurance. The following year, the banking group expanded considerably in Latin America through HSBC Latin American Holdings (UK) Limited.
All was going well until 2007 rolled around. The subprime crisis began to snowball, creating a year of huge challenges for banks, including HSBC, which was directly affected by the struggling U.S. property market through its American subsidiary, HSBC Finance Corporation. The clever thing that HSBC did, though, in 2007, was identify early on that there would be a huge impact of bad debts. As a result, it warned investors by means of a trading statement issued in February 2007, enabling them to, at least, try to prepare for the crisis before it became a swirling vortex. That said, by the end of 2007, HSBC did have to close its U.S. sub-prime mortgage loans business, Decision One.
In 2008, HSBC became the first foreign bank to take on a 20 percent interest in a domestic Vietnamese bank by increasing its existing stake in Techcombank. Also in 2008, HSBC strengthened its Central and Eastern European operations, opening new offices in the former Soviet states of Georgia and Kazakhstan, and expanding its existing services in EU member countries Poland, the Czech Republic and Austria.
HSBC regularly picks up honours and awards. In November 2008, Global Finance named HSBC the Best Consumer Internet Bank, and in July 2008, The Banker named HSBC the Top World Bank. Also in 2008, Euromoney awarded HSBC Global Markets with the honour of being the Best Emerging Markets Bank.
IN THE NEWS
August 2009: Cut in half
HSBC Holdings announced that its pretax profit in the first half of the year dropped to $5.02 billion, down from $10.2 billion in the same period a year before. But the company, which was affected by climbing bad debts, still managed to surpass analysts' $4.9 billion forecast. Total operating income also took a tumble for the half-year, dropping 6 percent to $40.2 billion from $42.9 billion in the previous year.
May 2009: Better, but not out of the woods
HSBC Holdings plc posted a $6.6 billion pre-tax profit on its debt for the first quarter 2009, up from $2.5 billion in the same period in 2008. In a conference call, CEO Michael Geoghegan admitted that "2009 promises to be a tough year," adding, "We are in this recession. We have not come out of it yet." HSBC, which doesn't issue full quarterly results, said bad debts increased from the same period in 2008 but were lower than in the preceding quarter.
April 2009: Big rights offering
HSBC Holdings plc sold about 5 billion shares of its stock to existing shareholders, raising $19.1 billion in one of the biggest rights offering in the history of the U.K. The sale, which fortified HSBC's balance sheet, is expected to allow HSBC to continue to avoid taking capital from the U.K. government.
January 2009: Gold for green
HSBC North America's new headquarters won LEED gold certification from the U.S. Green Building Council, based on a five-point rating system that analyzed sustainable site development, water conservation, energy efficiency, indoor environmental quality and materials selection.
The bank's new HQ recycles or composts a whopping 90 percent of its waste, and derives 100 percent of its electricity from renewable energy sources. Employees who drive fuel-efficient vehicles get prime parking spaces, and rainwater is collected for toilet flushing and grounds irrigation. Perhaps most important to anyone working long hours: light-guided window treatments follow the position of the sun, which allows the building to harvest natural daylight and adjust artificial lights accordingly.
December 2008: Global skills
HSBC North America's parent company HSBC Holdings plc ranked No. 21 in worldwide announced M&A for 2008, with 77 transactions worth a total of $78.4 billion, according to Thomson Reuters. In completed deals, it ranked even higher, coming in No. 16 with 75 transactions worth $152 billion. The Brit-centric bank didn't place on the U.S. mergers and acquisitions tables, but in global IPOs, it ranked as the No. 4 bookrunner, right behind Citi, UBS and J.P. Morgan.
September 2008: When the times got tough, staff had to go
Though HSBC may not have had to open its hands for government bailout funds, it did have to make thousands of job cuts in the wake of the worldwide financial crisis. In September 2008, less than two weeks after the collapse of New York-based investment bank Lehman Brothers, HSBC announced it would be cutting 1,100 jobs worldwide, representing 4 percent of its global banking and market division. Of this number, half were to be from the U.K. offices. Out of a then-global workforce of 335,000 employees, HSBC assured onlookers that the cuts only affected a miniscule 0.3 percent of its workforce. However, at the time of the announcement, HSBC executives didn't rule out the prospect of further cuts in the near future, having had already booked write-downs of US$18.7 billion dollars since the crisis kicked off in 2007.
Always room for improvement
For the most part, "HSBC is an incredibly diverse group," and "I see absolutely no evidence of discrimination." While "women are often not seen in trading roles," there is a "good amount in sales and structuring." And some "very high positions are staffed by women, so I don't think that it's an issue for HSBC." But the representation of ethnic minorities "could improve somewhat," admits one insider, though he adds that it might be "representative of the industry." The hiring of gays and lesbians at the firm receives high marks, though one contact comments, "I believe racial diversity is more evident." Another insider reports that "employees are very diverse ethnicity-wise - there are many Chinese, French and Indian workers as well as many Canadians."