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HSBC Holdings plc is a British multinational investment bank and financial services holding company. It is the second largest bank in Europe behind BNP Paribas,[7] with total equity of US$204.995 billion and assets of US$2.984 trillion as of December 2020. HSBC traces its origin to a hong in British Hong Kong, and its present form was established in London by the Hongkong and Shanghai Banking Corporation to act as a new group holding company in 1991;[8][9] its name derives from that company's initials.[10] The Hongkong and Shanghai Banking Corporation opened branches in Shanghai in 1865[1] and was first formally incorporated in 1866.[11]
HSBC has offices in 64 countries and territories across Africa, Asia, Oceania, Europe, North America, and South America, serving around 40 million customers.[12] As of 2020, it was the world's sixth largest bank by total assets and market capitalization. HSBC was the world's 40th-largest public company, according to a composite measure by Forbes magazine.[13]
HSBC is organised within three business groups: Commercial Banking, Global Banking and Markets (investment banking), Wealth and Personal Banking.[14][15] In 2020, the bank announced that it would consolidate its Retail Banking & Wealth Management arm with Global Private Banking, to form Wealth & Personal Banking.[16]
HSBC has a dual[17] primary listing on the Hong Kong Stock Exchange and London Stock Exchange and is a constituent of the Hang Seng Index and the FTSE 100 Index. It has secondary listings on the New York Stock Exchange, and the Bermuda Stock Exchange.
HSBC's history has been plagued by a succession of scandals and the bank has been repeatedly fined for money laundering (sometimes in relation with criminal organizations such as the Sinaloa cartel)[18] or setting up large scale tax avoidance schemes. In 2019 and 2020, HSBC had $8.5 trillion in assets under custody (AUC)[19] and over $4 trillion in assets under administration (AUA), respectively.[20]
The Hongkong and Shanghai Bank was founded by Thomas Sutherland in the then-British colony of British Hong Kong on 3 March 1865, and in Shanghai a month later, benefiting from the start of trading into China, including opium trading.[21] It was formally incorporated as The Hongkong and Shanghai Banking Corporation by an Ordinance of the Legislative Council of Hong Kong on 14 August 1866.[2] In 1980, HSBC acquired a 51% shareholding in US-based Marine Midland Bank, which it extended to full ownership in 1987. On 6 October 1989, it was renamed by the Legislative Council, by an amendment to its governing ordinance originally made in 1929, to The Hongkong and Shanghai Banking Corporation Limited, and became registered as a regulated bank with the then Banking Commissioner of the Government of Hong Kong.[22]
HSBC Holdings plc, originally incorporated in England and Wales,[23] was a non-trading, dormant shelf company when it completed its transformation on 25 March 1991[3] into the parent holding company to the Hongkong and Shanghai Banking Corporation Limited now as a subsidiary, in preparation for its purchase of the UK-based Midland Bank and the impending transfer of sovereignty of Hong Kong to China. HSBC Holdings' acquisition of Midland Bank was completed in 1992 and gave HSBC a substantial market presence in the United Kingdom. As part of the takeover conditions for the acquisition, HSBC Holdings plc was required to relocate its world headquarters from Hong Kong to London in 1993.[24]
Major acquisitions in South America started with the purchase of the Banco Bamerindus of Brazil for $1 billion in March 1997[25] and the acquisition of Roberts SA de Inversiones of Argentina for $600 million in May 1997.[26] In May 1999, HSBC expanded its presence in the United States with the purchase of Republic National Bank of New York for $10.3 billion.[27]
Expansion into Continental Europe took place in April 2000 with the acquisition of Crédit Commercial de France, a large French bank for £6.6 billion.[28] In July 2001 HSBC bought Demirbank, an insolvent Turkish bank.[29] In July 2002, Arthur Andersen announced that HSBC USA, Inc., through a new subsidiary, Wealth and Tax Advisory Services USA Inc. (WTAS), would purchase a portion of Andersen's tax practice. The new HSBC Private Client Services Group would serve the wealth and tax advisory needs of high-net-worth individuals. Then in August 2002 HSBC acquired Grupo Financiero Bital, SA de CV, Mexico's third largest retail bank for $1.1 billion.[30]
In November 2002, HSBC expanded further in the United States. Under the chairmanship of John Bond, it spent £9 billion (US$15.5 billion) to acquire Household Finance Corporation (HFC), a US credit card issuer and subprime lender.[31] In a 2003 cover story, The Banker noted "when banking historians look back, they may conclude that [it] was the deal of the first decade of the 21st century".[32] Under the new name of HSBC Finance, the division was the second largest subprime lender in the United States.[33]
The new headquarters of HSBC Holdings at 8 Canada Square, London officially opened in April 2003.[34]
In September 2003 HSBC bought Polski Kredyt Bank SA of Poland for $7.8 million.[35] In June 2004 HSBC expanded into China buying 19.9% of the Bank of Communications of Shanghai.[36] In the United Kingdom HSBC acquired Marks & Spencer Retail Financial Services Holdings Ltd for £763 million in December 2004.[37] Acquisitions in 2005 included Metris Inc, a US credit card issuer for $1.6 billion in August[38] and 70.1% of Dar es Salaam Investment Bank of Iraq in October.[39] In April 2006, HSBC bought the 90 branches in Argentina of Banca Nazionale del Lavoro for $155 million.[40] In December 2007 HSBC acquired the Chinese Bank in Taiwan.[41] In May 2008, HSBC acquired IL&FS Investment, an Indian retail broking firm.[42]
In 2005, Bloomberg Markets magazine accused HSBC of money laundering for drug dealers and state sponsors of terrorism. Then-CEO Stephen Green said that "This was a singular and wholly irresponsible attack on the bank's international compliance procedures", but subsequent investigation indicated that it was accurate and proved that the bank was involved in money laundering for the Sinaloa Cartel and throughout Mexico.[43][44][45][46][47]
In 2007, HSBC wrote down its holdings of subprime-related mortgage securities by $10.5 billion, becoming the first major bank to report its losses due to the unfolding subprime mortgage crisis.[48][49]
According to Bloomberg, "HSBC is one of world's strongest banks by some measures".[50] When HM Treasury required all UK banks to increase their capital in October 2007, the group transferred £750 million to London within hours, and announced that it had just lent £4 billion to other UK banks.[51]
In March 2009, HSBC announced that it would shut down the branch network of its HSBC Finance arm in the United States, leading to nearly 6,000 job losses and leaving only the credit card business to continue operating.[52][53] Chairman Stephen Green stated, "HSBC has a reputation for telling it as it is. With the benefit of hindsight, this is an acquisition we wish we had not undertaken."[54] According to analyst Colin Morton, "the takeover was an absolute disaster".[53][55]
In March 2009, it announced that it had made US$9.3 billion of profit in 2008 and announced a £12.5 billion (US$17.7 billion; HK$138 billion) rights issue to enable it to buy other banks that were struggling to survive.[56] However, uncertainty over the rights issue's implications for institutional investors caused volatility in the Hong Kong stock market: on 9 March 2009 HSBC's share price fell 24.14%, with 12 million shares sold in the last few seconds of trading.[57]
On 11 May 2013, the new chief executive Stuart Gulliver announced that HSBC would refocus its business strategy and that a large-scale retrenchment of operations, particularly in respect of the retail sector, was planned. HSBC would no longer seek to be 'the world's local bank', as costs associated with this were spiraling and US$3.5 billion needed to be saved by 2013, with the aim of bringing overheads down from 55% of revenues to 48%. In 2010, then-chairman Stephen Green planned to depart HSBC to accept a government appointment in the Trade Ministry. Group Chief Executive Michael Geoghegan was expected to become the next chairman. However, while many current and former senior employees supported the tradition of promoting the chief executive to chairman, many shareholders instead pushed for an external candidate.[58][59] HSBC's board of directors had reportedly been split over the succession planning and investors were alarmed that the row would damage the company.[60]
On 23 September 2010, Geoghegan announced he would step down as chief executive of HSBC.[61] He was succeeded as chief executive by Stuart Gulliver, while Green was succeeded as chairman by Douglas Flint; Flint was serving as HSBC's finance director (chief financial officer). August 2011: Further to CEO Stuart Gulliver's plan to cut $3.5 billion in costs over the next two years, HSBC announced that it will cut 25,000 jobs and exit from 20 countries by 2013 in addition to 5,000 job cuts announced earlier in the year. The consumer banking division of HSBC will focus on the UK, Hong Kong, high-growth markets such as Mexico, Singapore, Turkey, and Brazil, and smaller countries where it has a leading market share.[62] According to Reuters, Chief Executive Stuart Gulliver told the media, "There will be further job cuts. There will be something like 25,000 roles eliminated between now and the end of 2013."[63]
In August 2011 "to align our U.S. business with our global network and meet the local and international needs of domestic and overseas clients", HSBC agreed to sell 195 branches in New York and Connecticut to First Niagara Financial Group Inc, and divestures to KeyCorp, Community Bank, N.A. and Five Star Bank for around $1 billion, and announced the closure of 13 branches in Connecticut and New Jersey. The rest of HSBC's U.S. network will only be about half from a total 470 branches before divestments.[64] On 9 August 2011, Capital One Financial Corp. agreed to acquire HSBC's U.S. credit card business for $2.6 billion,[65] netting HSBC Holdings an estimated after-tax profit of $2.4 billion.[66] In September it was announced that HSBC sought to sell its general insurance business for around $1 billion.[67]
In 2012, HSBC was the subject of hearings of the U.S. Senate permanent subcommittee for investigations for severe deficiencies in its anti-money laundering practices (see Controversies). On 16 July the committee presented its findings.[68][69][70] Among other things, it concluded that HSBC had been transferring $7 billion in banknotes from its Mexican to its US subsidiary (much of it related to drug dealing[71]), was disregarding terrorist financing links[45] and was actively circumventing US safeguards to block transactions involving terrorists, drug lords and rogue regimes, including hiding $19.4 billion in transactions with Iran. This investigation followed on from a probe by the US Federal Reserve and Office of the Comptroller of the Currency found that there was "significant potential for unreported money laundering or terrorist financing".[72]
On 11 December 2012, HSBC agreed to pay a record $1.92 billion fine in this money laundering case. "Bank officials repeatedly ignored internal warnings that HSBC's monitoring systems were inadequate, the Justice Department said. In 2008, for example, the CEO of HSBC Mexico was told that Mexican law enforcement had a recording of a Mexican drug lord saying that HSBC Mexico was the place to launder money."[73] The United States Department of Justice, however, decided not to pursue criminal penalties, a decision which the New York Times labelled a "dark day for the rule of law."[74] HSBC chief executive Stuart Gulliver said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again."[73]
A 32-page brochure published on the HSBC website provides details of 2012 results in terms of markets, strategies, and businesses, as well as giving an outline of future plans.[75]
In July 2013, Alan Keir was appointed Chief Executive of HSBC Bank plc after Brian Robertson resigned from his post. Keir's duties include overseeing the firm's UK, European, Middle Eastern, and African divisions.[76]
In June 2014, an indirect wholly-owned subsidiary HSBC Life (UK) Limited agreed to sell its £4.2 billion UK pensions business to Swiss Re.[77] In February 2015 the International Consortium of Investigative Journalists released information about the business conduct of HSBC under the title Swiss Leaks based on the 2007 hacked HSBC account records from whistle-blower Hervé Falciani. The ICIJ alleges that the bank profited from doing business with corrupt politicians, dictators, tax evaders, dealers of blood diamonds, arms dealers and other clients.[78] US Senate investigators in 2012 had sought the hacked HSBC account records from Falciani and French authorities, but never received the data.[79]
HSBC announced in August 2015 that it would be selling its Brazilian unit to Banco Bradesco for $5.2 billion following years of disappointing performance.[80] In 2015, HSBC was recognised as the most trusted foreign bank in India by The Brand Trust Report 2015.[81]
In 2016, the bank was mentioned numerous times in connection with the Panama Papers investigation. Many Syrians were angered when their accounts were judged high-risk and closed, despite the bank reportedly telling Mossack Fonseca it was "comfortable" with Rami Makhlouf as a customer, even though US Treasury sanctions against him were in effect at the time.[82]
In May 2016, HSBC announced that it would shut 24 of its 50 branches in India over the following several months, reducing its presence in the country to fourteen cities.[83]
On 20 March 2017, the British newspaper The Guardian reported that hundreds of banks had helped launder KGB-related funds out of Russia, as uncovered by an investigation named Global Laundromat. HSBC was listed among the 17 banks in the UK that were "facing questions over what they knew about the international scheme and why they did not turn away suspicious money transfers," as HSBC "processed $545.3m in Laundromat cash, mostly routed through its Hong Kong branch." Other banks facing scrutiny under the investigation included the Royal Bank of Scotland, NatWest, Lloyds, Barclays and Coutts.[84] In response, HSBC stated that it was against financial crime, and that the case "highlights the need for greater information sharing between the public and private sectors."[85]
On 1 October 2017, Mark Tucker succeeded Douglas Flint as Group Chairman of HSBC, the first non-executive and outside chairman appointed by the group.[86] Also in October 2017, HSBC announced that John Flint, Chief Executive of Retail Banking and Wealth Management, would succeed Stuart Gulliver as Group Chief Executive on 21 February 2018.[87] It was further announced on 5 August 2019 that Flint was leaving and his role would be filled on a temporary basis by Noel Quinn, head of HSBC's global commercial bank.[88] Noel Quinn was subsequently appointed to the role on a permanent basis in March 2020.[89]
In February 2020, HSBC announced it would cut 35,000 jobs worldwide after it was announced corporate profits decreased by 33% in 2019.[90]
In October 2020, HSBC committed to achieve zero-emission by 2050, e.g., by this year it would not only become carbon neutral by itself but also will work only with carbon-neutral clients. It also committed to providing 750 - 1,000 billion dollar to help clients make the transition. It also pledged to achieve carbon neutrality in his own operations by 2030.[91]
In January 2021, HSBC announced that it would be closing 82 branches in Britain and therefore, more than 340 jobs would be cut.[92] The next month, the bank announced it would exit U.S. retail banking and sell or close its 150 remaining American branches.[93][94] HSBC plans to focus more on its Asian operations and an expansion in the Middle East.[95][93][96] In May 2021, it was announced that HSBC would cut back its involvement in retail banking in the United States. It will keep about 20-25 locations for international and high net worth clients. Cathay Bank will purchase 10 California branches and Citizens Financial Group will buy 80 branches, with 66 locations in the New York City Metro area. The remaining locations will be closed.[97]
HSBC has its world headquarters at 8 Canada Square in Canary Wharf, London.[98]
In preparation for Brexit, HSBC announced that it will be facing as much as $300 million in legal and relocation fees as it plans to relocate 1,000 staff members from London to Paris.[106] In the second quarter of 2017, the bank had $4 million in charges for "costs associated with the U.K.'s exit from the EU".[106] HSBC plans to move roughly one-fifth of its London-based investment bankers to its Paris offices in order to maintain a continuous access point to the European Union's single market.[106] While its headquarters will remain in London,[107] the staff movement is expected to avoid a loss of $1 billion of revenue after Brexit.[108][needs update]
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