HSBC 2003 Annual Report Download - page 9

HSBC HOLDINGS PLC
Description of Business
7
Introduction
HSBC is one of the largest banking and financial
services organisations in the world, with a market
capitalisation of US$172 billion at
31 December 2003.
Headquartered in London, HSBC operates
through long-established businesses and has an
international network of over 9,500 offices in
79 countries and territories in five regions: Europe;
Hong Kong; the rest of Asia-Pacific, including the
Middle East and Africa; North America; and South
America. Within these geographical regions, a
comprehensive range of financial services is offered
to personal, commercial, corporate, institutional,
investment and private banking clients. HSBC
manages its business through the following customer
groups: Personal Financial Services; Commercial
Banking; Corporate, Investment Banking and
Markets; and Private Banking. Whilst part of
Personal Financial Services, the consumer finance
operations of Household are currently a distinct
business and have been separately identified
accordingly. Services are delivered through
businesses which usually operate as domestic banks,
typically with large retail deposit bases and strong
liquidity and capital ratios. In North America,
Household is one of the largest consumer finance
companies in the US, and is substantially funded in
the wholesale market. By using HSBC’s extensive
technological links, businesses are able to access its
wide range of products and services and adapt them
to local customer needs.
The establishment of HSBC and its hexagon
symbol as a uniform, international brand has ensured
that it has become an increasingly familiar sight
across the world.
History and development
The founding member of HSBC, The Hongkong and
Shanghai Banking Corporation Limited (‘The
Hongkong and Shanghai Banking Corporation’), was
established in Hong Kong and Shanghai in 1865. The
bank expanded rapidly, with an emphasis on building
up representation in China and the rest of the Asia-
Pacific region, whilst also establishing a presence in
the major financial and trading centres in Europe and
America.
In the mid-1950s, The Hongkong and Shanghai
Banking Corporation embarked on a strategy of
pursuing profitable growth through acquisition as
well as organic development – a combination that
has remained a key feature of HSBC’s approach ever
since.
As each acquisition has been made, HSBC has
focused on integrating its newly acquired operations
with its existing businesses with a view to
maximising the synergy between the various
components. Key to this integration process is to
blend local and international expertise.
The most significant developments are described
below. Other acquisitions in 2003 are discussed in
the section headed ‘Business highlights in 2003’
under the relevant geographical region on pages 15
to 26.
The Hongkong and Shanghai Banking
Corporation purchased The Mercantile Bank of India
Limited and The British Bank of the Middle East
(now HSBC Bank Middle East Limited) in 1959. In
1965, The Hongkong and Shanghai Banking
Corporation acquired a 51 per cent interest
(subsequently increased to 62.14 per cent) in Hang
Seng Bank Limited (‘Hang Seng Bank’ ),
consolidating its position in Hong Kong. Hang Seng
Bank is the second-largest listed bank in Hong Kong
by market capitalisation.
From the beginning of the 1980s, The Hongkong
and Shanghai Banking Corporation began to focus its
acquisition strategy on the UK. In 1987, it purchased
a 14.9 per cent interest in Midland Bank plc, now
HSBC Bank plc (‘HSBC Bank’ ), one of the UK’s
principal clearing banks. In 1991, HSBC Holdings
plc was established as the parent company of HSBC
and, in 1992, HSBC Holdings purchased the
remaining interests in HSBC Bank. In connection
with this acquisition, HSBC’s head office was
transferred from Hong Kong to London in January
1993. To expand its base in the euro zone, in October
2000 HSBC completed its acquisition of 99.99 per
cent of the issued share capital of CCF S.A. (‘CCF’ ),
a major French banking group.
The Hongkong and Shanghai Banking
Corporation entered the US market in 1980 by
acquiring a 51 per cent interest in Marine Midland
Banks, Inc. (now HSBC USA Inc.). The remaining
interest was acquired in 1987.