Full Form of HSBC:
Hongkong and Shanghai Banking Corporation
HSBC Full Form is Hongkong and Shanghai Banking Corporation. It is a multinational financial services and banking corporation based in London, United Kingdom. It was founded by a famous banker called Sir Thomas Sutherland in 1865. Later it was incorporated in the year 1866 when Hong Kong was a colony of the British Empire.
HSBC is the Hong Kong’s largest bank and has its branches across the globe including; Asia, Europe, Africa, Oceania, South America, North America, etc. HSBC is one of the biggest names in the Banking industry across the globe. It is a strong determinant in the banking industry, which has expanded to nearly every prominent banking market internationally.
Presently, the HSBC is the fifth biggest bank in terms of overall assets amounting to trillions. The present bank was founded in the year 1991.The Hongkong and Shanghai Banking Corporation founded it with the purpose of having it as a new holding company. Though the origins of the bank can be traced to Hongkong, much of its operations are conducted from the main headquarters only.
The Hongkong and Shanghai Banking Corporation was officially incorporated in the year 1866 and considers both Hongkong and London as its maiden markets. The HSBC bank is a power hub, with its presence felt across the globe. It has about 6,600 functional offices in about 80 countries and caters to more than 60 million people. As of the survey conducted by the Forbes in the year 2014, the HSBC is presently the sixth biggest public company in the world.
The entire business conducted by the HSBC is divided into many segments, namely: Global banking and Markets (which pertains to Investment Banking), Global Private Banking, Retail Banking, Wealth Management, and Commercial Banking. It has listings in some of the prominent stock exchanges in the world such as Hong Kong Stock Exchange, London Stock Exchange, FTSE 100 Index, Bermuda Stock Exchange, etc. Lately, the company has been embroiled in certain controversies that have given unwarranted publicity to the bank. Thus, now you know, in brief, what kind of banking baron HSBC is. To know more about it, here are some facts you must know about it.
Early history of HSBC
The history of the HSBC bank dates back to the colonial period in Hong Kong. Sir Thomas Sutherland, a Scotsman, founded the HongKong and Shanghai Bank in the year 1865 and later a month later, he founded one in Shanghai as well. The legislative Council of Shanghai passed an Ordinance in the year 1866, which officially incorporated the Hongkong and Shanghai Banking Corporation. Later in the year 1929, the Hongkong and Shanghai Banking Corporation Ltd became a registered regulated bank.
In the year 1959, the HSBC Holdings Plc was incorporated in the United Kingdom however, it was incorporated under the name Vernat Trading Company Ltd, which was later renamed as Vernat Eastern Agencies Ltd. However, it undertook its entire transformation in the year 1991. By the year 1992, HSBC established a prominent presence in the United Kingdom. In the year 1993, The HSBC Holdings Plc repositioned its world headquarters to London from HongKong.
Expansion between the period 2000-2010
A breakthrough expansion happened in the year 2000 when it acquired a French bank, Credit Commercial de France for a huge amount. Eventually, it undertook several major acquisitions in several other countries. In the year 2002, HSBC made a move to expand in the United States when it acquired Household Finance Corporation (abbreviated as HFC), which is a prominent credit card issuer. The corporation carved out a new division, HSBC Finance, which became the second biggest subprime lender in the United States.
During this period, the same HSBC Finance announced to shut down of the very same HSBC Finance division in the United States. In the year 2005, the magazine Bloomberg markets alleged that HSBC was engaged in money laundering activities with several drug dealers and sponsoring terrorist activities. The allegations made considerable tarnishment to the repute of the banking corporation. During the financial crisis between the period 2007 to 2010, HSBC managed to fare better than most of the global banks.
After the year 2011
In the year 2011, Stuart Gulliver, the Chief Executive, made an announcement that the corporation will reshift its business strategy and will engage in retail sector even more. In the same year, the corporation decided to sell about 195 branches in Connecticut and New York to the corporation First Niagara Financial Group Inc as well as shutting down of 13 main branches in the cities, New Jersey and Connecticut.
The allegations of money laundering caused major concern and HSBC became a subject of discussion of the United States Senate investigative committee. Eventually, HSBC agreed to pay a record sum of money as fine in the money laundering incident. Despite major achievements, HSBC’s active engagement with drug dealers, particularly from Mexico, has greatly affected its credibility. This reminds us of the old saying that not all that glitters are gold.
Operations of HSBC
The present world headquarters of the HSBC is situated at 8 Canada Square in London. The operations of the HSBC have been spread in every major financial market. The Americas, Europe, and Asia-Pacific represent about 1/3 of its business activities. In Hongkong, it is the biggest bank, which prints majority of the local currency.
One from the Big Four Auditors, KGMP, audited the HSBC previously. Both of them have their headquarters situate adjacent to each other in 8 Canada Square. In the year 2013, a public announcement was made that PriceWater House Coopers will take on the task of an audit of HSBC from the year 2015. A recent technical mismanagement case brought much-unwarranted embarrassment to the corporation, as some of the consumer data were accidentally leaked that yet again brought the bank in the circle of suspicion even though the amount of damage was minuscule.
HSBC conducts various operations through subsidiaries and principal divisions that have been established across different countries. These entities take on some of the crucial tasks relating to the HSBC’s business. HSBC’s subsidiaries and principal divisions play a key role in the effective functioning of the corporation and therefore, will not go untouched.
Principal subsidiaries of HSBC
As mentioned before, HSBC has acquired a significant position in almost every prominent financial market across the globe. Thus, it is natural that it has a wide network of subsidiaries across the world. Some of its principal subsidiaries in the Asia-pacific region include HSBC Bank America, HSBC Bangladesh, HSBC Bank Vietnam, HSBC Bank India, HSBC Bank Indonesia, HSBC Thailand, Hang Seng bank Ltd, HSBC Taiwan, HSBC Japan, etc.
As far as Europe is concerned, its principal subsidiaries include HSBC Bank Malta plc, HSBC Bank France, HSBC Bank International, etc. In the American continents, it has HSBC Bank USA, HSBC Bank Canada, HSBC Bank Bermuda, and HSBC Finance Corporation. Finally, in the middle-eastern and African region, it has three principal subsidiaries namely: The Saudi British bank, HSBC Bank Egypt, and HSBC Bank Middle East Limited.
Since the business of HSBC is growing incredibly, the corporation plans to expand its business to American and Africa continent ever more in the coming time. Most of its subsidiaries have already acquired an impressively high effective performance in their respective areas of operation. Apart from subsidiaries, HSBC also operates several key business divisions that help in expanding and strengthening the business.
Principal business divisions and groups
HSBC conducts its operations with the help of an organized, structured framework, which includes four main business groups, namely: Investment Banking, Commercial Banking, Retail Banking and Wealth Management (abbreviated as RBVM), and finally, Global Private Banking. We shall take up each one independently.
- Commercial banking: This group is engaged in catering with financial support services to small to middle-market sized business corporations. It currently caters to more than 3 million customers, which include clubs, sole proprietors, public companies, and partnerships, etc.
- Global banking and Markets (also known as Investment Banking): It is a powerful investment wing of HSBC. The group is engaged in providing services relating to financial solutions and investment banking to several types of clients in areas such as capital markets, cash management, corporate banking, equities, foreign exchange, securities, etc. The group currently operates functional offices in about 60 nations and is spearheaded by Samir Assaf.
- Retail banking and Wealth Management (abbreviated as RBWM): It is one of the biggest groups of HSBC in terms of the number of customers it caters. Presently, it caters to the need of about 55 million customers across the globe in fields relating to savings and current accounts, car financing, credit cards, investments, mortgage loans, and insurance. The group was formerly known as Personal Financial Services (abbreviated as PFS).
- Global Private Banking: Global Private Banking is a collective term used for HSBC private Bank and HSBC Trinkaus. The group is engaged in providing the elite class and its constituent families financial services across 42 nations.
Group service centers
HSBC operates several group service centers in nine nations, particularly from economies where cheap labor is easily available. Those nine countries include the United Kingdom, where such centers have been established Leeds, Edinburgh, Hamilton, Manchester, Leicester, Coventry, etc; Brazil, where it operates a group service center from Curitiba; India, where centers have been established in cities such as Kolkata, Hyderabad, Bombay, Gurgaon, Bangalore, Pune, Vishakhapatnam, etc; the Czech Republic (in Ostrava); Sri Lanka (from Rajagiriya); Malaysia (from Kuala Lumpur); Poland (from Krakow); China (from Guangzhou, Shenzhen, and Shanghai); and the Philippines (from Manila). Due to increase in the number of global service centers in low-cost economies, trade unions from many developed nations have been protesting because the trend has yielded loss of jobs and implementation of wage caps.
One of the most popular product lines of HSBC is HSBC Direct. It is basically an online banking operation that invites customers for the purposes of savings, accounts, and mortgages. It was officially launched for the first time in the United States of America in the year 2005. The product line expanded outside the United States of America and expanded to countries such as India, South Korea, Taiwan, France, and Canada. In the year 2009, Poland was the new admission in the list of countries with HSBC Direct services. As of now, HSBC Advance constitutes of HSBC Direct in the United States of America.
HSBC Advance is another global product line that has been founded with the purpose of catering to the needs and requirements of working professionals. There are marked variations in qualifications and benefits pertaining to the product line from one country to the other but a general requirement is a salary of minimum $1500 every month or maintenance of minimum $25,000 as bank deposits in Current or Savings Accounts. Its benefits include finance planning facilities, advanced ATM card, several protection plans, platinum credit cards, the opening of accounts in a foreign country, etc.
The premium finance service from HSBC comes under the head HSBC Premier. The Group markets its own distinctive Card by the name HSBC Premier World Card. Qualification and advantages appended to the service, like other services vary with country. The group places a Premier Relationship Manager, global services center with 24 hours access, free banking facilities, and other facilities. The perks of being a part of HSBC Premier is that every HSBC Premier customer would be entitled to all related services without the need to qualify the standards of HSBC Premier in any particular country.
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