HSBC 2007 Annual Report Download - page 9

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As we explained in March 2007, our conclusion
was that the Group should place renewed emphasis
on investing in fast moving emerging markets in
Asia-Pacific, the Middle East and Latin America. We
believe we can grow strongly and sustainably. We
achieved our position as the number one
international bank in Asia-Pacific and the Middle
East over many years; by contrast, we have built one
of Latin America’s largest financial services
businesses in little more than a decade.
In mature markets, we are determined to focus
our businesses on areas where we can build on our
unique global franchise, so as to benefit from the
long-term trend of increasing international
connectivity. We have international customer bases
across many of our businesses, from the largest
corporates, through to small or medium-sized
enterprises, to the internationally mobile mass
affluent and other personal customers with specific
international requirements. We have developed a
clear approach which is enabling our business to
focus strongly on these groups of customers now and
in the years ahead.
Where opportunities arise, we shall seek to
redeploy capital towards emerging markets through
divestment of assets of greater strategic value to
others. In France, we have received a firm cash offer
of US$3.1 billion for our seven, separately branded,
regional banks and have entered into exclusive
discussions. This potential transaction, which is
subject to necessary approvals and consultation,
could complete in mid-2008. We remain committed
to France through our HSBC-branded network
serving retail and commercial customers and through
our activities in Global Banking and Markets,
Private Banking, asset management and insurance.
During 2007, we acquired the 50 per cent of Erisa,
our French insurance business, which we did not
own.
We will also build businesses, in both our
emerging and mature markets, that help our
customers with their long-term savings needs, as
demographics and wealth creation trends around the
world make this ever more important to them.
Finally, we will shape our business operations so
that we use our scale to deliver better, more efficient
services to our customers. Their use of technology
increasingly dictates how they interact with us. We
increasingly employ technology to create better
products which we can deliver globally at lower
cost. As we grow our direct banking business, we
will create opportunities to meet more of our
customers’ financial needs.
Building on our position as the world’s
leading international emerging markets
bank
During 2007, we continued to build our businesses
in emerging markets organically. For example, on a
like-for-like basis, risk-weighted assets in these areas
grew by 42 per cent compared with 16 per cent for
the Group as a whole.
As the leading international bank in the country
of our birth, China, we were delighted to be among
the first to incorporate locally in the mainland. We
have built the largest branch network of any
international bank and we have significant and
profitable strategic investments in our Chinese
associates.
In mainland China, through our own businesses
and in conjunction with our associates, we achieved
for the first time in our history a profit before tax of
over US$1 billion, in addition to over US$7 billion
generated in Hong Kong.
As China continues to reshape itself as a
21st century powerhouse, HSBC seeks to play a
constructive role in its continued progressive
economic and social development. We were the first
international bank to establish and open a rural bank.
Hang Seng Bank has agreed to acquire 20 per cent of
Yantai City Commercial Bank in the fast growing
Bohai region of China.
Elsewhere in Asia-Pacific, we have sought to
further strengthen our position through a series of
investments in faster-growing economies. In South
Korea, we have agreed to acquire 51 per cent of
Korea Exchange Bank for US$6.5 billion, subject to
regulatory approvals. In Taiwan, we acquired
Chailease Credit Services, a factoring company
serving commercial customers, and agreed to acquire
the assets, liabilities and operations of The Chinese
Bank, which will extend our network by 39 branches
and bring us many new customers.
As foreign investment rules are eased, we have
made significant investments to expand our business
in Vietnam with the acquisition of a further 5 per
cent interest in Techcombank, bringing our stake
to 14.4 per cent, and the purchase for some
US$255 million of a 10 per cent interest in Bao Viet,
the leading insurance company in the country.
The latter investment reflects our determination
to increase the contribution of insurance to Group
earnings. We also entered into agreements to invest
in a 26 per cent interest in a new life insurance joint
venture in India, in partnership with two of the larger
state-owned banks, and to acquire just under 50 per
cent of Hana Life Insurance Company in South