h Management HSBC: The world’s local bank from small enterprises to large corporation The Hong Kong and Shanghai Banking Corpora- The bank provides financing solutions as w tion was created in Shanghai in 1865. Its primary as international trade transactions. business was to finance trade with China. Up • HSBC Retail Banking and Wealth Manager until the Second World War, it expanded rapidly provides 36 million customers worldwide in the Asia Pacific region (Japan, Malaysia, the personal banking services: retail, wealth a Philippines and Thailand), with only a limited presence in the USA and Europe. After 1950, asset management and insurance. the bank embarked on a series of acquisitions • HSBC Private Banking is devoted to high in Europe (UK, France), the Middle East, Latin worth individuals and families, through 12 America (Mexico, Argentina, Brazil) and the banking centers. Products and services include USA. It listed on the New York, London, Paris and investment management, incorporating ad Hong Kong stock exchanges, and also moved its sory discretionary and brokerage services. corporate headquarters from Hong Kong to Lon- • The five regions are: Europe, Asia Pacific don in 1993. In 1999 it adopted the name of HSBC dle East and North Africa, North America an and positioned itself as ‘the world’s local bank’, Latin America. defining itself as a global bank with strong local presence and knowledge. Its network now com- The bank has developed a strategy of building prises 4,000 offices in 70 countries. networks within the world’s largest and fastest In 2015, HSBC rearranged its organizational growing trade corridors (streams of products, structure into four global businesses and five services and information moving between regions: The global businesses are: geographic entities) and economic zones (see Figure 5.16). The company states that: ‘Our • HSBC Global Banking and Markets with around network of businesses covers the world’s larg- 4,100 clients in more than 50 countries and est and fastest growing trade corridors and territories. Customers are governments, cor- porations and institutions worldwide to whom economic zones. More than 45 per cent of our the bank offers a range of banking, financing. client revenue derives from businesses and advisory as well as capital markets and risk individuals with an interational presence management services. (http://www.hsbc.com/about-hsbc/our-strategy/ • HSBC Commercial Banking serves approx- the-value-of-our-network). The distribution of the bank’s net income and imately two million customers in 54 countries, profit before tax are given in Table 5.11. 1379 billion $ China billion $ PRIORITY MARKET TWO-SIDED CORRIDORS China Hong Kong Mexico Canada USA France Germany – UK China USA Australia USA China Japan USA China Korea Japan PRIORITY MARKET ONE-SIDED CORRIDORS USA China Vietnam Korea Germany Poland 772 billion $ billion $ WITHIN REGIONS BETWEEN REGIONS Figures within bubbles represent the projected size of trade within corridor by 2020 Figure 5.16 HSBC priority market trade corridors Table 5.11 HSBC distribution of revenues, employment and profit before taxes 2 Europe Asia Middle East North Latin Total Pacific and North America America Africa Employees 1000) 71 122 1220 246 Revenues ($ million 18000 22000 2900 7900 2 200 53000 Profits and losses 15 million -6700 13800 1500 180 -1580 7200 By business [%] Retail Banking and Wealth Management 8% 30% 39% 9% 63% Commercial Banking 32% 21% 19% 361% -4% 84% Global Banking and Markets 15% 23% 43% 144% -20% 75% -55% 2% 50% -1% -46% – 100% 24% 36% -4899 115% -78% prown using data from HSBC Annual Report 2016 http://www.hse.com investorrelations/group-results-and-reporting/ 15 HSBC Private Banking Corporate Questions 1 The bank defines its busines Desses really global? W 2 What is your assessme its businesses as ‘global’. What is your opinion of this definition? Are all the busi- cally global? What are the implications for decision malang sessment of HSBC’s strategy of focusing on trade corridors?
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