The Hongkong and Shanghai Banking Corporation

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The Hongkong and Shanghai Banking Corporation Limited
Type	Subsidiary of HSBC Holdings plc
Founded	1865
Headquarters	HSBC Hong Kong headquarters building, Hong Kong SAR, China
Key people	Vincent Cheng, Chairman Michael Smith, CEO
Industry	Finance and Insurance
Products	Financial Services
Employees	26,000
Slogan	The world's local bank
Website	www.hsbc.com.hk

The Hongkong and Shanghai Banking Corporation Limited also written as The Hongkong & Shanghai Banking Corporation Limited (Traditional Chinese: 香港上海滙豐銀行有限公司), based in Hong Kong, is a wholly owned subsidiary and the founding member of the HSBC Group, which is traded on several stock exchanges as HSBC Holdings plc. The business ranges from the traditional High Street roles of personal finance and commercial banking, to corporate and investment banking, and private banking.

Known locally by the affectionate term Honkers and Shankers or equally its old trademark HongkongBank, the bank was founded by the Scot, Thomas Sutherland to finance trade in the Far East in 1865. It is the largest bank in Hong Kong.

Contents 1 History 1.1 Foundation 1.2 Business development 1.3 Second World War 1.4 International expansion 1.5 The creation of the HSBC Group 2 Hong Kong banking 2.1 Hong Kong dollar bank notes 2.2 Headquarters 3 Other Hong Kong operations 3.1 Hang Seng Bank 4 Asia Pacific operations 4.1 China 4.2 Indonesia 4.3 New Zealand 4.4 Pakistan 4.5 Philippines 5 Cultural References 6 See also 7 External links 8 References

[edit] History

[edit] Foundation

The bank first leased Wardley House in Hong Kong at HKD $500 a month in 1864. After raising a capital of HKD $5 million, the bank opened its door in 1865. The original location of the bank was considered crucial since the construction was based on some of the best fung shui in Colonial Hong Kong^[1]. In March 1865 the enterprise "Hongkong and Shanghai Banking Corporation Limited" was established to finance the growing trade between China and Europe, with an office opened in Shanghai during April of that year. The bank was incorporated in Hong Kong by special dispensation from the British Treasury in 1866, and under the Hongkong and Shanghai Bank Ordinance 1866^[2], a new branch in Japan was also established. The bank handled the first public loan in China in 1874, thereafter issuing most public loans.

[edit] Business development

Sir Thomas Jackson Bart became chief manager in 1876. During his twenty-six year tenure, the Bank became a leader in Asia. Notable events included being the first bank established in Thailand, in 1888, where it printed the country's first banknotes; acting as banker for the Hong Kong government from the 1880s; and participating in the management of British colonial government accounts in China, Japan, Penang and Singapore. A period of expansion followed, with new branch offices opening in Bangkok (1921), Manila (1922) and Shanghai (1923), and a new head office building in Hong Kong in 1935. Jackson is also credited with a statue in Statue Square.

[edit] Second World War

In anticipation of the Japanese invasion of Hong Kong in 1941, the Bank's head office moved to London. During the period 1941-1943 the chief manager Vandeleur Grayburn, and his successor David C Edmondston, both died while interned by the Japanese. Arthur Morse was appointed Chief Manager in 1943 and led the bank after the war. The head office moved back to Hong Kong in 1946. During the Japanese occupation the Bank's head office building was occupied as the headquarters of the Hong Kong Japanese military government.

[edit] International expansion

Michael Turner became Chief Manager in 1953 and set about diversifying the business. His tenure came to an end in 1962 having established The Hongkong and Shanghai Banking Corporation of California 1955 and having acquired The British Bank of the Middle East and the Mercantile Bank (based in India) in 1959. Under the tenure of Jake Saunders from 1962 the bank continued to expand. 1965 saw the bank purchase a controlling interest in Hang Seng Bank of Hong Kong, and 1972 the formation of a merchant banking arm, Wardley Limited. In 1964 the Chief Managership was superseded as the top executive role in the bank by an Executive Chairmanship (Saunders taking this role until retirement in 1972).

In 1980, the Bank launched a hostile takeover bid for the Royal Bank of Scotland, although the bid was blocked by the British government.

[edit] The creation of the HSBC Group

In 1980, the Bank, now under the chairmanship of Michael Sandberg acquired a 51 per cent stake in Marine Midland Bank, of the United States of America, and continued its expansion with the establishment of The Hongkong Bank of Australia Limited in 1986. 1987, under the Chairmanship of Willie Purves, saw the bank's ownership of Marine Midland Bank increased to 100% and the acquisition of a 14.9% share in Midland Bank in the United Kingdom.

The present building in Hong Kong was designed by Sir Norman Foster and was held as one of the most expensive and technologically advanced building in the world in 1986 costing HKD $5.3 billion^[3].

In 1991 HSBC Holdings plc was established to act as a parent company to the group; shares are currently traded on the London, Hong Kong, Paris, New York and Bermuda stock exchanges.

[edit] Hong Kong banking

Under the HSBC brand, the bank maintains a network of around 220 branches throughout the Hong Kong SAR, from which it offers a wide range of financial products and services. For some time in the late 1980s and early 1990s, the bank was known by the name HongkongBank in its native city, although it now trades as HSBC. During that period, it also adopted the idiosyncratic practice of calling its ATMs Electronic Teller Card (ETC) machines.

[edit] Hong Kong dollar bank notes

HSBC is one of the three commercial banks which issue banknotes for Hong Kong (see Hong Kong dollar) - the other two being the Bank of China (Hong Kong) and Standard Chartered Bank. Of the total notes in circulation measured by value, HSBC is the most prolific issuer, its notes representing 62.9% of those in issue.

[edit] Headquarters

HSBC's Hong Kong headquarters are at 1 Queen's Road Central in the Central area on Hong Kong Island. The HSBC Hong Kong headquarters building was also home to HSBC Holdings plc's headquarters until the latter firm's move to 8 Canada Square, London to meet the requirements of the UK regulatory authorities after the acquisition of the Midland Bank. It was designed by British architect Lord Norman Foster, and was the most expensive building in the world based on usable floor area at the time it was built.

[edit] Other Hong Kong operations

[edit] Hang Seng Bank

Main article: Hang Seng Bank

HSBC acquired a 62.14%, controlling interest in the local Hang Seng Bank in 1965 during a crisis of the latter. The Hang Seng Index for stock prices in Hong Kong is named after the Hang Seng Bank.

[edit] Asia Pacific operations

The Hongkong and Shanghai Banking Corporation maintains a network of around 600 offices in 20 countries in Asia Pacific, as well as owning of a number of HSBC banks operating in various countries and holding the group's stakes in further lenders, particularly in mainland China.

Operations of the group in the Asia Pacific are under this subsidiary, and it forms the regional headquarters for Asia Pacific. This means that it is responsible for entities such as HSBC Bank Australia Limited, Hang Seng Bank, HSBC Bank (China) Company Limited and HSBC Insurance (Asia-Pacific) Holdings Limited, and the management of stakes in Bank of Communications (19.9%), Barrowgate Limited (24.64%) and Industrial Bank Co., Ltd.

[edit] China

Main article: HSBC Bank (China)

HSBC established its Shanghai branch office on 3 April 1865. Apart from the period 1941-1945, during which Japan forced HSBC and other foreign-invested banks to leave the local market, it has had a continuous presence in the city. HSBC was historically housed in one of the largest and most impressive buildings on The Bund, Shanghai's boulevard formerly known as the "Wall Street of the Orient". In April 1955, HSBC handed over this office to the Communist government, and its activities were continued in rented premises. Its activities were mainly in inward remittances and export bills until the economic reforms of the late 1970s. Chinese authorities had offered to lease HSBC its old headquarters on The Bund in 1995 but the offer was turned down. Currently HSBC is located in its own HSBC Tower across the river in the Pudong area of Shanghai.

On 6 August 2004, HSBC announced that it would pay USD 1.75 billion for a 19.9% stake in Shanghai-based Bank of Communications. At the time of the announcement, Bank of Communications was China's fifth-largest bank and the investment by HSBC was eight times bigger than any previous foreign investment in a Chinese bank. The industry considered this move, giving HSBC a lead in the race to grab pieces of mainland China's banking market. A year earlier, HSBC had joined with Hong Kong's Shanghai Commercial Bank to purchase an 11% stake in Bank of Shanghai (HSBC paid USD 62.6 million for an 8% stake) and USD 733 million for a 10% stake in Ping An Insurance.

[edit] Indonesia

The Hongkong and Shanghai Banking Corporation opened its first Indonesian office in Jakarta in 1884. Having been able to restart its operations after the Second World War, it was again forced to close in mid-1960s, however the Bank was granted a new banking licence in 1968 its operations have grown to make it one of the largest foreign banks operating in Indonesia.

[edit] New Zealand

HSBC's operations in New Zealand are as a branch of The Hongkong and Shanghai Banking Corporation, which first gained a licence from the Reserve Bank of New Zealand on 22 July 1987.^[4] Today HSBC offers a range of financial products from a network of 9 offices. ^[5]

[edit] Pakistan

HSBC's operations further extend to Pakistan with 4 offices, two of which are located in Karachi. Further offices recently opened in Lahore (inaugurated on 20 May 2006) and Islamabad (inaugurated on 23 June 2006). HSBC is looking to expand its operations in Pakistan, with more offices to follow in near future.

[edit] Philippines

HSBC's history in the Philippines dates back more than 130 years with the establishment of their first branch in Binondo, Manila in 1876. In its early years of operation, HSBC serviced the booming Philippine sugar industry. At the turn of the century, it financed railways that connected provincial towns across Luzon to Manila. During the American regime, HSBC was called to advise on Philippine currency reform. It's current headquarters are in Makati, and a new building is being constructed in the Bonifacio Global City. Today, HSBC Philippines operates in key Philippine cities such as Cebu and Davao. It has ended Citibank and Standard Chartered's monopoly on international banking in the Philippines.

[edit] Cultural References

In Hong Kong, the local population sometimes refers to the bank as 獅子銀行, "the Lion Bank", because of the pair of lion statues outside the HSBC headquarters, which also appear in some banknotes. Local films and television series set in Hong Kong, especially comedies, uses this nickname when referring to the bank.

Although the name of Hongkong was changed to Hong Kong by Hong Kong Government on September 3, 1926, HSBC uses the older Hongkong, as the bank's name was conceived before the official declaration of the modern two-word name, and it was decided to retain the single word spelling in the Bank's name: Hongkong.

[edit] See also

• HSBC Holdings plc
• HSBC Bank (China)
• HSBC Bank Australia
• HSBC Bank Malaysia
• Hang Seng Bank
• Bank of Communications
• HSBC Hong Kong headquarters building

[edit] External links

• The Hongkong and Shanghai Banking Corporation Limited
• HSBC Group History

[edit] References