HSBC 2015 Annual Report Download - page 9

Sound progress on strategic initiatives
The Strategic Report highlights delivery to date
against the strategic objectives laid out in last
June’s Investor Update.
When assessing management performance during
2015, outside of the financial results, the Board took
particular account of the following aspects.
The successful negotiation of a majority stake
in a new nationally licensed securities joint-venture
in mainland China is the culmination of more
than a decade of seeking out an appropriate
platform through which to participate in the
country’s fast-developing securities markets.
Once final approvals have been received, we
believe this will establish a landmark opportunity
for HSBC to contribute to the development of
China’s capital markets.
During 2015, the Group maintained, reinforced and
broadened its leadership position in all aspects of
the internationalisation of the renminbi. This position
has been built over the past five years to establish
a highly competitive platform to service China’s
international trade and investment flows as it
pursues the financial liberalisation and outgoing
investment priorities laid out in the recent 13th
five-year plan. The recent highly successful State
visit to the UK, following an equally successful
Economic and Financial dialogue in China, served to
illustrate the huge potential for mutually beneficial
cooperation between the UK and China from which
HSBC is uniquely positioned to benefit in the realm
of financial services.
The disposal of our Brazilian operations, which
is expected to complete shortly, was both timely
and well executed. This divestment was a key
element of the Board’s desire to simplify the Group
and redeploy capital to geographic areas where
we have greater competitive strength, most
particularly in Asia.
Our three major businesses generated higher
revenue, notwithstanding the uncertain economic
‘ Our three major businesses generated higher
revenue, notwithstanding the uncertain
economic environment and the considerable
reshaping necessitated by regulatory changes’
environment and the considerable reshaping
necessitated by regulatory changes. Global Banking
and Markets and Retail Banking and Wealth
Management, in particular, have made significant
changes to their business models and are now
beginning to see the benefits. Commercial Banking
continued to leverage the value of the Group’s
international network and product capabilities.
Global Private Banking, chastened by the exposure
of historical failings in Switzerland, accelerated
disposal of a number of customer portfolios as
it refocused its business model on core customer
segments within a fully transparent operating model.
Across all businesses, the Board recognised
a heightened emphasis on customer focus, which
permeated recruitment, training, product design
and incentives. This is essential to the restoration
of trust.
Finally, and underpinning the above, we made
further progress embedding the standards now
expected to protect customers and the financial
system from bad actors and financial crime. We are,
however, not yet where we need to be. There is still
more investment to make with ever greater urgency
as more and more activity takes place digitally
through multiple channels and via increasingly
sophisticated mobile devices. HSBC’s determination
to address emerging risks and identify bad actors
remains resolute. The Board has made it one of its
top priorities to oversee and ensure management’s
delivery of the necessary enhancements to
customer and transaction screening systems.
The regulatory landscape has
become clearer
The second half of 2015 saw completion of some
of the most important and complex initiatives
undertaken to repair the fault lines that contributed
to the global financial crisis. International agreement
was reached on the amount of total loss-absorbing
capacity that global systemically important banks,
such as HSBC, need for orderly resolution, without
risks to public funds. This allowed the Financial
Stability Board to report to G20 leaders that they
had finalised the tools needed to end ‘too big to fail’
in the banking sector. There is still much to do
to build these tools into national legislative and
regulatory frameworks; however, this international
agreement is an important step forward towards
finally settling the capital base against which we
can assess our target returns.
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HSBC HOLDINGS PLC
7
Group Chairman’s Statement