HSBC (other)

HSBC Holdings plc ( zh, 滙豐; formerly known as The Hongkong and Shanghai Banking Corporation) is a British universal bank and financial services group headquartered in London, England, with unique historical and business links to East Asia and a highly multinational footprint. It is the largest Europe-based bank by total assets, ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 trillion in assets under custody (AUC) and $4.9 trillion in assets under administration (AUA).

HSBC traces its origin to a ''hong'' trading house in British Hong Kong. The bank opened branches in Shanghai in 1865 and was first formally incorporated in 1866. In 1991, the present parent legal entity, HSBC Holdings plc, was established in London and the historic Hong-Kong-based bank from whose initials the group took its name became that entity's fully-owned subsidiary. The next year (1992), HSBC took over Midland Bank and thus became one of the largest domestic banks in the United Kingdom.

HSBC has offices, branches and subsidiaries in 62 countries and territories across Africa, Asia, Oceania, Europe, North America, and South America, serving around 39 million customers. As of 2023, it was ranked no. 20 in the world in the Forbes rankings of large companies ranked by sales, profits, assets, and market value. HSBC has a dual primary listing on the Hong Kong Stock Exchange and London Stock Exchange and is a constituent of the Hang Seng Index and the FTSE 100 Index. It has secondary listings on the New York Stock Exchange, and the Bermuda Stock Exchange.

HSBC has been implicated in a number of controversies and the bank has been repeatedly fined for money laundering (sometimes in relation with major criminal organizations such as the Sinaloa cartel)Gangster Bankers: Too Big to Jail, How HSBC hooked up with drug traffickers and terrorists. And got away with it
, ''Rolling Stone'' magazine, Matt Taibbi, 14 February 2013. or setting up large scale tax avoidance schemes.

History

Foundation

After the British established Hong Kong as a crown colony in the aftermath of the First Opium War, merchants from other parts of the British Empire, now in Hong Kong, felt the need for a bank to finance the growing trade, through Hong Kong and sometimes also through Shanghai, between China and India, the rest of the British Empire and Europe, of goods, produces and merchandises of all kinds, but especially opium, cultivated in or transited (re-exported) through ''the Raj''.

The founder, Thomas Sutherland of the Peninsular and Oriental Steam Navigation Company, wanted a bank operating on "sound Scottish banking principles." Still, the original location of the bank was considered crucial and the founders chose Wardley House in Hong Kong since the construction was based on some of the best feng shui in colonial Hong Kong..

After raising a capital stock of HK$5 million, the bank commenced operations on 3 March 1865. It opened a branch in Shanghai during April of that year, and started issuing locally denominated banknotes in both the Crown Colony and Shanghai soon afterwards. The bank was incorporated in Hong Kong as The Hongkong and Shanghai Banking Corporation by ''the Hongkong and Shanghai Bank Ordinance'' (Numbers 2 and 5 of 1866), and a branch in Japan was also established in Yokohama in 1866. Shares of the bank were one of 13 securities initially traded on the Shanghai Stock Exchange, and were traded on that exchange until the Japanese closed the exchange in 1941.

Business development

Sir Thomas Jackson became chief manager in 1876. During his twenty-six-year tenure, the bank became a leader in Asia. A period of expansion followed, with new buildings constructed in Bangkok (1921), Manila (1922) and Shanghai (1923), and a new head office building in Hong Kong in 1935. Bank note issuance displaced other forms of the era and of the region, such as silver taels, due to political and economic instability. HSBC gained significant influence as a result.

International expansion

Michael Turner became Chief Manager in 1953 and set about diversifying the business. His tenure came to an end in 1962 having established The Hong Kong and Shanghai Banking Corporation of California 1955 and having acquired The British Bank of the Middle East and the Mercantile Bank (based in India) in Aug 1959. Turner was succeeded in 1962 by Jake Saunders. In 1964 the Chief Managership was superseded as the top executive role in the bank by an Executive Chairmanship.

During the Konfrontasi period in the 1960s, a group of Indonesian forces bombed the MacDonald House building in Singapore (at the time used by HSBC) just a few months after Singapore was granted its independence from Malaysia. Three people were killed, 33 injured, and the two Indonesian military officers responsible for the bombing were tried and executed.

The present building in Hong Kong was designed by Sir Norman Foster and was held as one of the most expensive and technologically advanced buildings in the world in 1986, costing HK$5.3 billion.

Creation of the HSBC Group

On 6 October 1989, it became registered as a regulated bank with the Banking Commissioner of the Government of Hong Kong.

HSBC Holdings plc, originally incorporated in England and Wales, was a non-trading, dormant shelf company when it completed its transformation on 25 March 1991 into the parent holding company to the Hongkong and Shanghai Banking Corporation Limited now as a subsidiary, in preparation for its purchase of the UK-based Midland Bank and the impending transfer of sovereignty of Hong Kong to China. HSBC Holdings' acquisition of Midland Bank was completed in 1992 and gave HSBC a substantial market presence in the United Kingdom. As part of the takeover conditions for the acquisition, HSBC Holdings plc was required to relocate its world headquarters from Hong Kong to London in 1993.

Major acquisitions in South America started with the purchase of the Banco Bamerindus of Brazil for $1 billion in March 1997 and the acquisition of Roberts SA de Inversiones of Argentina for $600 million in May 1997. In May 1999, HSBC expanded its presence in the United States with the purchase of Republic National Bank of New York for $10.3 billion.

2000 to 2010

Expansion into Continental Europe took place in April 2000 with the acquisition of Crédit Commercial de France, a large French bank, for £6.6 billion. In July 2001 HSBC bought Demirbank, an insolvent Turkish bank. In July 2002, Arthur Andersen announced that HSBC USA, Inc., through a new subsidiary, Wealth and Tax Advisory Services USA Inc. (WTAS), would purchase a portion of Andersen's tax practice. The new HSBC Private Client Services Group would serve the wealth and tax advisory needs of high-net-worth individuals. Then in August 2002 HSBC acquired Grupo Financiero Bital, SA de CV, Mexico's third largest retail bank for $1.1 billion.

In November 2002, HSBC expanded further in the United States. Under the chairmanship of John Bond, it spent £9 billion (US$15.5 billion) to acquire Household Finance Corporation (HFC), a US credit card issuer and subprime lender. In a 2003 cover story, ''The Banker'' noted "when banking historians look back, they may conclude that twas the deal of the first decade of the 21st century". Under the new name of HSBC Finance, the division was the second largest subprime lender in the United States.

The new headquarters of HSBC Holdings at 8 Canada Square, London officially opened in April 2003.

In July 2003, HSBC announced that it had agreed to acquire 82.19% of the Korean fund administrator, Asset Management Technology (AM TeK), for $12.47 million in cash; it was the largest fund administrator in South Korea, with $24 billion of assets under administration. In September 2003 HSBC bought Polski Kredyt Bank SA of Poland for $7.8 million. In June 2004 HSBC expanded into China buying 19.9% of the Bank of Communications of Shanghai. In the United Kingdom HSBC acquired Marks & Spencer Retail Financial Services Holdings Ltd for £763 million in December 2004. Acquisitions in 2005 included Metris Inc, a US credit card issuer for $1.6 billion in August and 70.1% of Dar es Salaam Investment Bank of Iraq in October. In April 2006, HSBC bought the 90 branches in Argentina of Banca Nazionale del Lavoro for $155 million. In December 2007 HSBC acquired the Chinese Bank in Taiwan. In May 2008, HSBC acquired IL&FS Investment, an Indian retail broking firm.

In 2005, Bloomberg Markets magazine accused HSBC of money laundering for drug dealers and state sponsors of terrorism. Then-CEO Stephen Green said that "This was a singular and wholly irresponsible attack on the bank's international compliance procedures", but subsequent investigation indicated that it was accurate and proved that the bank was involved in money laundering for the Sinaloa Cartel and throughout Mexico.

In July 2006, HSBC announced that it would acquire Westpac's sub-custody operations in Australia and New Zealand for $112.5 million, making HSBC the leading sub-custody and clearing player in Australia and New Zealand.

In 2007, HSBC wrote down its holdings of subprime-related mortgage securities by $10.5 billion, becoming the first major bank to report its losses due to the unfolding subprime mortgage crisis.

According to Bloomberg, "HSBC is one of world's strongest banks by some measures". When HM Treasury required all UK banks to increase their capital in October 2007, the group transferred £750 million to London within hours, and announced that it had just lent £4 billion to other UK banks.

In March 2009, HSBC announced that it would shut down the branch network of its HSBC Finance arm in the United States, leading to nearly 6,000 job losses and leaving only the credit card business to continue operating.Jon Menon
HSBC Rues Household Deal, Halts U.S. Subprime Lending
Bloomberg L.P. 2 March 2009. Chairman Stephen Green stated, "HSBC has a reputation for telling it as it is. With the benefit of hindsight, this is an acquisition we wish we had not undertaken." According to analyst Colin Morton, "the takeover was an absolute disaster".

In March 2009, it announced that it had made US$9.3 billion of profit in 2008 and announced a £12.5 billion (US$17.7 billion; HK$138 billion) rights issue to enable it to buy other banks that were struggling to survive. However, uncertainty over the rights issue's implications for institutional investors caused volatility in the Hong Kong stock market: on 9 March 2009 HSBC's share price fell 24.14%, with 12 million shares sold in the last few seconds of trading.

2010 to 2013

On 25 April 2011, HSBC decided to shut down its retail banking business in Russia and reduce its private banking presence to a representative office.

On 11 May 2013, the new chief executive Stuart Gulliver announced that HSBC would refocus its business strategy and that a large-scale retrenchment of operations, particularly in respect of the retail sector, was planned. HSBC would no longer seek to be 'the world's local bank', as costs associated with this were spiraling and US$3.5 billion needed to be saved by 2013, with the aim of bringing overheads down from 55% of revenues to 48%. In 2010, then-chairman Stephen Green planned to depart HSBC to accept a government appointment in the Trade Ministry. Group Chief Executive Michael Geoghegan was expected to become the next chairman. However, while many current and former senior employees supported the tradition of promoting the chief executive to chairman, many shareholders instead pushed for an external candidate. HSBC's board of directors had reportedly been split over the succession planning and investors were alarmed that the row would damage the company.

On 23 September 2010, Geoghegan announced he would step down as chief executive of HSBC. He was succeeded as chief executive by Stuart Gulliver, while Green was succeeded as chairman by Douglas Flint; Flint was serving as HSBC's finance director (chief financial officer). August 2011: Further to CEO Stuart Gulliver's plan to cut $3.5 billion in costs over the next two years, HSBC announced that it will cut 25,000 jobs and exit from 20 countries by 2013 in addition to 5,000 job cuts announced earlier in the year. The consumer banking division of HSBC will focus on the UK, Hong Kong, high-growth markets such as Mexico, Singapore, Turkey, and Brazil, and smaller countries where it has a leading market share. According to Reuters, Chief Executive Stuart Gulliver told the media, "There will be further job cuts. There will be something like 25,000 roles eliminated between now and the end of 2013."

In August 2011 "to align our U.S. business with our global network and meet the local and international needs of domestic and overseas clients", HSBC agreed to sell 195 branches in New York and Connecticut to First Niagara Financial Group Inc, and divestures to KeyCorp, Community Bank, N.A. and Five Star Bank for around $1 billion, and announced the closure of 13 branches in Connecticut and New Jersey. The rest of HSBC's U.S. network will only be about half from a total 470 branches before divestments. On 9 August 2011, Capital One Financial Corp. agreed to acquire HSBC's U.S. credit card business for $2.6 billion, netting HSBC Holdings an estimated after-tax profit of $2.4 billion. In September it was announced that HSBC sought to sell its general insurance business for around $1 billion.

In 2012, HSBC was the subject of hearings of the U.S. Senate permanent subcommittee for investigations for severe deficiencies in its anti-money laundering practices (see Controversies). On 16 July the committee presented its findings. Among other things, it concluded that HSBC had been transferring $7 billion in banknotes from its Mexican to its US subsidiary (much of it related to drug dealing), was disregarding terrorist financing links and was actively circumventing US safeguards to block transactions involving terrorists, drug lords and rogue regimes, including hiding $19.4 billion in transactions with Iran. This investigation followed on from a probe by the US Federal Reserve and Office of the Comptroller of the Currency found that there was "significant potential for unreported money laundering or terrorist financing".

On 11 December 2012, HSBC agreed to pay a record $1.92 billion fine in this money laundering case. "Bank officials repeatedly ignored internal warnings that HSBC's monitoring systems were inadequate, the Justice Department said. In 2008, for example, the CEO of HSBC Mexico was told that Mexican law enforcement had a recording of a Mexican drug lord saying that HSBC Mexico was the place to launder money." The United States Department of Justice, however, decided not to pursue criminal penalties, a decision which the '' New York Times'' labelled a "dark day for the rule of law." HSBC chief executive Stuart Gulliver said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again."

Since 2013

In July 2013, Alan Keir was appointed chief executive of HSBC Bank plc after Brian Robertson resigned from his post. Keir's duties include overseeing the firm's UK, European, Middle Eastern, and African divisions.

In June 2014, an indirect wholly-owned subsidiary HSBC Life (UK) Limited agreed to sell its £4.2 billion UK pensions business to Swiss Re. In February 2015 the International Consortium of Investigative Journalists released information about the business conduct of HSBC under the title ''Swiss Leaks'' based on the 2007 hacked HSBC account records from whistle-blower Hervé Falciani. The ICIJ alleges that the bank profited from doing business with corrupt politicians, dictators, tax evaders, dealers of blood diamonds, arms dealers and other clients. US Senate investigators in 2012 had sought the hacked HSBC account records from Falciani and French authorities, but never received the data.

HSBC announced in August 2015 that it would be selling its Brazilian unit to Banco Bradesco for $5.2 billion following years of disappointing performance. In 2015, HSBC was recognised as the most trusted foreign bank in India by The Brand Trust Report 2015.

In 2016, the bank was mentioned numerous times in connection with the Panama Papers investigation. Many Syrians were angered when their accounts were judged high-risk and closed, despite the bank reportedly telling Mossack Fonseca

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