HSBC 2001 Annual Report Download - page 26

HSBC HOLDINGS PLC
Description of Business (continued)
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comprehensive range of financial services, including
corporate banking, investment banking and
insurance.
Working with HSBC Asset Management, Group
Treasury and Group Insurance, Private Banking has
sought shared initiatives for the benefit of clients.
Most importantly these have included structured
investment products and tax-effective life insurance
products with an international trust component.
Other
The other business line includes:
• income and expenses of wholesale insurance
operations;
• the results of head office operations, including
income earned on the deployment of centrally
held capital resources and stewardship costs of
HSBC’ s head office operations. This also
includes certain regulatory and operational
liquidity costs incurred for the benefit of
operational entities as a whole and not directly
attributable to individual business lines;
• the results of centrally held investment
companies and portfolios; and
• a number of individually significant unusual
items, including the impact of the Princeton
Note provision and the exceptional bad debt
provisions and currency redenomination losses
in Argentina.
Competitive environment
HSBC Holdings and its subsidiaries face intense
competition in all the markets they serve. HSBC
competes with other major financial institutions,
including commercial banks, savings and loan
associations, credit unions, consumer finance
companies, major retailers, brokerage firms and
investment companies providing commercial
banking products and services, and with investment
banks and the investment banking operations of
commercial banks providing investment banking
products and services.
Global factors
Consolidation in the banking industry
The trend towards bank consolidations, at both the
national and international levels, is creating a broader
range of banks capable of competing directly with
HSBC in an increasing number of markets
worldwide in which previously only HSBC and a
few other global banks offered the full range of
banking services.
Limited market growth
In HSBC’s key markets, the United Kingdom,
France, the United States and Hong Kong, there is
limited market growth in the provision of basic
financial and banking services. There is, however,
growth potential in the provision of a full range of
financial services.
Advances in technology
Technological innovations, including new and
expanding information and communication
technologies, are altering radically HSBC’s range of
competitors, as specialist providers and non financial
organisations begin to offer financial services
without the need of a traditional physical branch
network. Such innovations increase the pressure on
traditional banks to maintain and enhance service
quality and also to make the investments required to
offer similar services. HSBC is actively adapting its
business to allow customers to access its full range of
services in the manner they wish: through the
internet, interactive TV, mobile phones, WAP,
telephone banking or the branch system.
Regional factors
Europe
Despite limited market growth, an increasing number
of new entrants continue to enter the market in the
United Kingdom, including a number of telephone
banking and internet banking service providers. Life
assurers and de-mutualised building societies that
have become banks are now direct competitors of
HSBC Bank plc. Several established UK banks have
also decided to launch separately branded internet
banks in addition to their existing services.
An investigation into the supply of banking
services to small and medium-sized businesses was
referred to the UK Competition Commission in April
2000. The 19 month-long investigation concluded on
19 October 2001 when the full report was presented
to the Secretary of State for Trade and Industry. We
still await publication of this report.