HSBC 2014 Annual Report Download - page 4

HSBC BANK PLC
Strategic Report: Purpose and Strategic Objectives
2
Our Purpose and Strategic
Objectives
The purpose of HSBC Bank plc is to connect customers to
opportunities, enable businesses to thrive and
economies to prosper, and ultimately help people to
fulfil their hopes and realise their ambitions.
Our strategic priorities
HSBC aims to be the world’s leading and most respected
international bank. We will achieve this by focusing on
the needs of our customers and the societies we serve,
thereby delivering long-term sustainable value to all our
stakeholders.
In 2013, HSBC announced a set of three interconnected
and equally weighted priorities for 2014 to 2016 to help
us deliver our strategy:
• grow the business and dividends;
• implement Global Standards; and
• streamline processes and procedures.
Each priority is complementary and underpinned by
initiatives being undertaken within our day-to-day
business. Together they create value for our customers
and contribute to the long-term sustainability of the
group and HSBC.
In Europe the group’s aim is to be the leading and most
respected international bank connecting Europe with the
rest of the world. On an operational level the group has
developed a strategy for each of four global businesses
following HSBC’s strategic priorities while also focusing
on increasing capital and cost efficiency.
How we measure performance
We track our progress in implementing our strategy with
a range of financial and non-financial measures or key
performance indicators. These are set out on page 11.
From 2015 we have revised our targets to better reflect
the changing regulatory and operating environment.
Value creation
Within the group we continue to follow the vision for the
long-term direction of HSBC which was first outlined in
2011 along with a clear strategy that will help us achieve
it. Our strategy guides where and how we seek to
compete. We constantly assess our progress against this
strategy and provide regular updates to stakeholders.
Through our principal activities – making payments,
holding savings, enabling trade, providing finance and
managing risks – we play a central role in society and in
the economic system. Our target is to build and maintain
a business which is sustainable in the long term.
How we create value
Banks, and the individuals within them, play a crucial role
in the economic and social system, creating value for
many parties in different ways.
We provide a facility for customers to securely and
conveniently deposit their savings. We allow funds to
flow from savers and investors to borrowers, either
directly or through the capital markets. The borrowers
use these loans or other forms of credit to buy goods or
invest in businesses. By these means, we help the
economy to convert savings which may be individually
short-term into financing which is, in aggregate, longer
term. We bring together investors and people looking for
investment funding and we develop new financial
products. We also facilitate personal and commercial
transactions by acting as payment agent both within
countries and internationally. Through these activities,
we take on risks which we then manage and reflect in
our prices.
Our direct lending includes residential and commercial
mortgages and overdrafts, and term loan facilities. We
finance importers and exporters engaged in international
trade and provide advances to companies secured on
amounts owed to them by their customers.
We also offer additional financial products and services
including broking, asset management, financial advisory,
life insurance, corporate finance, securities services and
alternative investments. We make markets in financial
assets so that investors have confidence in efficient
pricing and the availability of buyers and sellers. We
provide these products for clients ranging from
governments to large and mid-market corporates, small
and medium-sized enterprises, high net worth
individuals and retail customers. We help customers
raise financing from external investors in debt and equity
capital markets. We create liquidity and price
transparency in these securities allowing investors to buy
and sell them on the secondary market. We exchange
national currencies, helping international trade.
We offer products that help a wide range of customers
to manage their risks and exposures through, for
example, life insurance and pension products for retail
customers and receivables finance or documentary trade
instruments for companies. Corporate customers also
ask us to help with managing the financial risks arising in
their businesses by employing our expertise and market
access.
An important way of managing risks arising from changes
in asset and liability values and movements in rates is
provided by derivative products such as forwards,
futures, swaps and options. In this connection, we are an
active market-maker and derivative counterparty.
Customers use derivatives to manage their risks, for
example, by:
• using forward foreign currency contracts to hedge
their income from export sales or costs of imported
materials;
• using an inflation swap to hedge future inflation-
linked liabilities, for example, for pension payments;
• transforming variable payments of debt interest into
fixed rate payments, or vice versa; or
• providing investors with hedges against movements
in markets or particular stocks.
We charge customers a spread, representing the
difference between the price charged to the customer
and the theoretical cost of executing an offsetting hedge