HSBC 2005 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$182 billion at 31 December
2005.
Headquartered in London, HSBC operates
through long-established businesses and has an
international network of over 9,800 properties in
76 countries and territories in five geographical
regions: Europe; Hong Kong; Rest of Asia-Pacific,
including the Middle East and Africa; North America
and South America. Within these regions, a
comprehensive range of financial services is offered
to personal, commercial, corporate, institutional,
investment and private banking clients. Services are
delivered primarily by domestic banks, typically
with large retail deposit bases, and consumer finance
operations.
HSBC manages its business through four
customer groups: Personal Financial Services;
Commercial Banking; Corporate, Investment
Banking and Markets; and Private Banking. Personal
Financial Services incorporates the Group’s
consumer finance businesses, reflecting their
increasing integration within mainstream financial
services around the world. The largest of these is
HSBC Finance Corporation, one of the leading
consumer finance companies in the US.
The establishment in 1999 of HSBC as a
uniform, international brand name ensured that the
Group’s hexagon corporate symbol 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 both Hong Kong and Shanghai in
1865. The bank expanded rapidly, with an emphasis
on building up representation in mainland China and
throughout the rest of Asia, while 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.
With each acquisition, HSBC focused on
integrating its newly acquired operations with its
existing businesses with the aim of maximising the
synergy between the various components. Key to
this integration process is the blending of local and
international expertise.
The most significant developments are
described below. Other acquisitions in 2005 are
discussed in the ‘Financial Review’ on pages 26 to
177.
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 (‘HSBC
Bank Middle East’) in 1959. In 1965, it acquired a
51 per cent interest (subsequently increased to 62.14
per cent) in Hang Seng Bank Limited (‘Hang Seng
Bank’), consolidating its leadership position in Hong
Kong. Hang Seng Bank is the third-largest listed
bank in Hong Kong by market capitalisation.
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.
In 1981, The Hongkong and Shanghai Banking
Corporation incorporated its then existing Canadian
operations. HSBC Bank Canada has since made
numerous acquisitions, expanding rapidly to become
the largest foreign-owned bank in Canada and the
seventh-largest overall at 31 December 2005.
From the early 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 the
HSBC Group and, in 1992, it purchased the
remaining interest in HSBC Bank. As a consequence
of this acquisition, HSBC’s head office was
transferred from Hong Kong to London in January
1993.
In 1997, HSBC assumed selected assets,
liabilities and subsidiaries of Banco Bamerindus do
Brasil S.A., now HSBC Bank Brasil S.A.-Banco
Múltiplo (‘HSBC Bank Brazil’), following the
intervention of the Central Bank of Brazil, and in
Argentina completed the acquisition of Grupo
Roberts, now part of HSBC Bank Argentina S.A.
(‘HSBC Bank Argentina’).
In December 1999, HSBC acquired Republic
New York Corporation, subsequently merged with
HSBC USA, Inc., and Safra Republic Holdings S.A.
In July 2004, HSBC Bank USA, Inc. merged with