HSBC A brief history

Contents

Foreword 1

Introduction 2

HSBCintheAsia-Pacificregion 4

HSBCinEurope 14

HSBCintheMiddleEast 22

HSBCintheAmericas 26

ThemakingofthemodernHSBCGroup 32

PrincipalmembersoftheHSBCGroup 36

Furtherreading 37

Cover: A detail of some of the images displayed on the HSBC History Wall at the HSBC Head Office in London. A major work of art designed and built by Thomas Heatherwick Studio, the History Wall comprises nearly 4,000 images relating to HSBC’s history around the world.Below, left: The HSBC History Wall seen from the main entrance of the HSBC Head Office in London. Centre: Postcard sent in 1903, showing the offices of The Hongkong and Shanghai Banking Corporation inHong Kong. Right: Advertisement promoting business accounts, issued by Midland Bank in 1968.

HSBCwasbornfromonesmallidea–alocalbankservinginternationalneeds.InMarch1865,HSBCopeneditsdoorsforbusinessinHongKongandtodayitwelcomescustomersallovertheworld.

TheinterveningyearshaveformedthecharacterofHSBC.Itsexperienceshavecreateditscorestrengthsofresilience,adaptabilityandcapabilityforinnovation.Aglanceatitshistoryexplainswhyitbelievesincapitalstrength,strictcostcontrolandinbuildinglong-termrelationshipswithcustomers.HSBChasweatheredchangeinallforms–revolutions,economiccrises,newtechnologies–andhasadaptedtosurvive.Growthhascomeorganicallyandthroughstrategicacquisitions,andthesepurchaseshavebroughttheirownstrengthsandculturestotheGroup.TheresultingcorporatecharacterofHSBCenablesittomeetthechallengesofthefinancialworldoftodayandtomorrow.

Thisbriefhistoryintroducesthemajorevents,decisionsandpersonalitiesthathavemadeHSBCwhatitistoday.

May2012

Foreword

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Below, left: Staff of the Imperial Bank of Persia’s chief office in Tehran in 1934. Centre: The 1866 annual report of the Citizens’ Savings Bank. The business later became part of the Republic National Bank of New York. Right: HSBC’s hexagon symbol is installed at the top of the new HSBC Head Office at 8 Canada Square, London.

View of Hong Kong waterfront in the 1860s when HSBC opened its doors for business. The bank’s first office is on the far left.

Celebrating the opening of a new HSBC branch in Shanghai in June 2007.

IntroductionHeadquarteredinLondon,HSBCHoldingsplcisoneofthelargestbankingandfinancialservicesorganisationsintheworld.HSBC’sinternationalnetworkcomprisesaround7,200officesin85countriesandterritoriesinEurope,theAsia-Pacificregion,theAmericas,theMiddleEastandAfrica.

Throughaninternationalnetworklinkedbyadvancedtechnology,HSBCprovidesacomprehensiverangeoffinancialservicestoindividuals,businessesandinstitutions.Intotal,HSBCservesover85millionpersonalandalmost3.6millioncommercialcustomers.Tomeettheneedsofthesecustomers,HSBCemploysaround300,000employeesspeakingover100languages.At31December2012,HSBC’stotalassetsamountedtojustoverUS$2,500billion.

AlthoughtheGroup’sholdingcompany,HSBCHoldingsplc,wasformedasrecentlyas1991,manyofitsprincipalconstituentcompaniesopenedforbusinessoveracenturyagoandhave

longexperienceintheirhomeandinternationalmarkets.Thestoryofthegrowthanddevelopmentofthesecompaniesisrichinvarietyandachievement,withaninternationalpedigreethatisuniqueinbankinghistory.

ThisbriefhistorydescribestheoriginsandevolutionofthecompaniesthatmakeuptheHSBCGroup.Thehistoryconcludeswithasummaryofthefar-reachingchangesinrecentyearsthathavegivenHSBCitsspecialplaceintoday’smajorfinancialmarkets.

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Right: HSBC’sHead Office at 8 Canada Square, London.Below: Map showing the offices of the HSBC Group in 1965.

HSBC in the Asia-Pacific regionBeginnings, 1865HSBC’snameisderivedfromTheHongkongandShanghaiBankingCorporationLimited,thefoundingmemberofthemodernGroup.ThebankoweditsoriginstothebusinesscommunitiesoftheChinacoastinthe1860s.Atthattime,thefinanceoftradeintheregionwasnotwelldevelopedandmosttransactionswerestillhandledbytheEuropeantradinghouses,orhongs,ratherthanbyprofessionalbanks.Bytheearly1860s,localbusinessmenneededlargerandmoresophisticatedfacilities.InHongKong,inparticular,businessleadersrequiredspecialistbankingservices–preferablyfromabankthatwaslocallyownedandmanaged.

Thefoundingofthebankin1865answeredthisneed.ThenewcompanywastheinspirationofThomasSutherland,thentheHongKongSuperintendentofthePeninsularandOriental

SteamNavigationCompany,whoproducedaprospectusforalocallybasedbankoperatingonsound‘Scottishbankingprinciples’.TheprospectusattractedthesupportofabroadspectrumofHongKonginterests,includingAmericanandIndiantradinghousesaswellasEuropeanfirms,andtheinitialcapitalofHK$5millionwasquicklytakenupinHongKong,ShanghaiandCalcutta.Onthisbasis,thebankopenedforbusinessinHongKongon3March1865.Then,asnow,thebank’sheadquarterswereat1Queen’sRoad.Onemonthlater,on3April1865,thebank’sShanghaiofficeopenedforbusiness.Initialresponsefromcustomersinthetwocitieswasfavourable,bothfromtheforeignbusinesscommunityandfromthecompradores,theinfluentialChineseintermediariesinchargeoflocalstaffandbusinessdealingsintheChinesecommunity.

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Detail from a painting showing a view of the waterfront at Victoria West, Hong Kong, in about 1860, shortly before the founding of The Hongkong and Shanghai Banking Corporation in 1865.

Thenewbank’scommitmenttolocalownershipandmanagementrequiredaspecialarrangementforincorporation.RatherthanoperateunderexistingBritishorcolonialregulations—whichwouldhaverequiredaLondonheadoffice—thebank’sdirectorspersuadedtheTreasuryinLondontoacceptincorporationunderaspecialHongKongordinance.ThisallowedthebanktomaintainaheadofficeinHongKongwithoutlosingtheprivilegeofissuingbanknotesandholdinggovernmentfunds.Inthisway,thebank(whichhadstartedlifeunderalocalCompaniesOrdinanceastheHongkongandShanghaiBankingCompanyLimited)assumedthenameTheHongkongandShanghaiBankingCorporationinDecember1866.Thereafter,thebank’sstatutoryframeworkremainedbasicallyunchangeduntil1989,whenregistrationundertheHongKongCompaniesOrdinancewascompleted.

Early business and developmentSoonafteritsformationinHongKongandShanghai,thebankestablishedanetworkofagentsandbranchesaroundtheworld.AlthoughthatnetworkreachedasfarasEuropeandNorthAmerica,theemphasiswasplacedonbuildinguprepresentationinChinaandtherestoftheAsia-Pacificregion.

InmanyofitsbranchesandagenciesinAsia,TheHongkongandShanghaiBankingCorporationwasthepioneerofmodernbankingpractices.Fromtheoutset,tradefinancewasastrongfeatureofitslocalandinternationalbusiness,anexpertisethathasbeenrecognisedthroughoutitshistory.Bullionandexchangebusinesseswere

alsoimportantintheearlyyears.InJapan,whereabranchwasopenedatYokohamain1866,thebankactedasanadvisertothegovernmentonbankingandcurrency.In1888,itwasthefirstbanktobeestablishedinThailand,whereitprintedthecountry’sfirstbanknotes.By1900,thebranchnetworkinAsiaextendedtoIndia(1867),thePhilippines(1875)andSingapore(1877),andtocitiesinwhatarenowMalaysia,Myanmar,SriLankaandVietnam.

Inthe19thcentury,internationalbankingofthiskindrequiredinnovationandhighlevelsofrisk.Thebankhaditsshareofsetbacksinitsearlyyears,includingover-commitmenttoanumberoflocalindustrialventures.Fromthemid-1870s,however,thebankreneweditsfocusontradefinance.ThomasJackson,ChiefManageronthreeoccasionsbetween1876and1902,dominatedthisperiodofthebank’sgrowthandledittobecometheforemostfinancialinstitutioninAsia.Inachievingthisreputation,Jacksonandhissuccessorsweresupportedbyadistinctivecadreofmanagersandstaff.Theseofficers,manyofwhomhadbeguntheircareerswithEnglishorScottishjoint-stockbanks,weretrainedinLondonbeforetakingupappointmentsinAsia.Onreachingthehigherlevelsofmanagement,thebank’sofficerscouldcallonvariedexperienceinthemanydifferentsettingsofthebank’soperations.

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Left: Sir Thomas Jackson (1841-1915), a key figure in the early history of The Hongkong and Shanghai Banking Corporation.

The senior officers of The Hongkong and Shanghai Banking Corporation in 1870. The bank’s first manager, Victor Kresser, is seated in the centre of the group.

Banker to Asian governmentsTheHongkongandShanghaiBankingCorporation’sinternationalreputationinthelate19thandearly20thcenturiesowedmuchtoitsachievementsingovernmentfinance.Bythe1880s,itwasactingasbankertotheHongKonggovernmentandassoleorjointbankerforBritishgovernmentaccountsinChina,Japan,PenangandSingapore.Theissueofbanknoteswasalsoanimportantcontributiontobusinessservicesinallofthebank’sareasofoperation.

Theoutstandingexampleofthebank’sroleingovernmentfinancewasitsmanagementofnewloansforChina.ThebankhandledChina’sfirstpublicloan—the8percentFoochowloanof1874—andthereafterissuedmostofChina’spublicloans.Theseissuesincludedloansforrailwayconstructionandotherinfrastructureprojectsand,by1910,thebankwastheprimemoverintheChinaConsortium,amultinationalagencyforloanstoChina.

Business in the early 20th centuryAftertheshockanddisruptionthattheFirstWorldWarbroughttointernationaltrade,TheHongkongandShanghaiBankingCorporationlookedforwardtoexpansioninitsAsianmarkets.

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Thenewheadofficeat1Queen’sRoad(1935)andthenewbuildingsatmajorbranchessuchasBangkok(1921),Manila(1922)andShanghai(1923)reflectedthisconfidence.Incontrast,thepoliticaloutlookinChinagrewincreasinglyuncertainand,inSouth-EastAsia,thebankfacedheaviercompetitionfromDutchandFrenchbanks.Throughoutthe1930s,inkeepingwithitslong-standingconnectionswithgovernmentfinanceinChina,thebanktookaleadingpartineffortstostabilisetheChinesenationalcurrency.

IntheSecondWorldWar,themajorityofthebank’sEuropeanstaffbecameprisonersofwarastheJapaneseadvancedthroughAsia.ThoseinManchuria,JapanandIndo-Chinawererepatriated,butmostofthosewhofailedtoescapewereinterned.TheChiefManager,SirVandeleurGrayburn,andhisdesignatedsuccessor,DCEdmondston,diedwhileprisonersinHongKong.Meanwhile,in1941,BritishregulatorsrequiredthatArthurMorse,asChairmanofthebank’sLondonAdvisoryCommittee,shouldactasChairmanofthebank.Twoyearslater,theLondonCommitteewasempoweredtoactasaBoardofDirectorsandMorsewasappointedtothedualroleofChairmanandChiefManager.

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Far left: A bound volume of circulars sent to the branches by the head office of The Hongkong and Shanghai Banking Corporation in 1885. This page refers to staff passages and reductions arranged by the bank with P.&O. The bank’s founder, Thomas Sutherland, was chairman of P.&O. at this time. Left: A postcard view of the Queen’s Road entrance to the head office building of The Hongkong and Shanghai Banking Corporation in 1915.Below: View of the Bund in Shanghai in the late 1870s. The Hongkong and Shanghai Banking Corporation had moved from Nanking Road to premises on the Bund (second building from left) in 1873.

Post-war recoveryAftertheSecondWorldWar,inJune1946,thebankwasabletorestoreitsheadofficepowersandfunctionstoHongKong.Intheimmediatepost-warperiod,thebankquicklytookonakeyroleinthereconstructionoftheHongKongeconomy.ItssupportfortheskillsandexperienceofnewcomerstoHongKongwasespeciallyvitaltotheupsurgeinmanufacturinginthisperiod.Asaresult,thebank’stotalassetstripledtoHK$3.6billionbetween1940and1954.

Initsothermarkets,however,thebankneededtomakemajorreadjustments.AfterthecivilwarinChina,mostofthemainlandbrancheswereclosedbetween1949and1955,leavingonlytheShanghaiofficetocontinueitslongandeventfulservicesince1865.

New alliances in Asian bankingThechangesofthepost-warperiod—theconcentrationonHongKongandtheclosureofthebranchesinmainlandChina—carriedtheriskthatthebankwasgrowingtoonarrowinitssphereofinterests.UnderMichaelTurner’sleadershipbetween1953and1962,thebankavoidedtheriskbydiversifyingitsbusinessinaseriesofacquisitionsandalliances.Theseadditions,whichincludedtheformationofTheHongkongandShanghaiBankingCorporationofCalifornia(seepage26)andthepurchaseofTheBritishBankoftheMiddleEast(page22),weretobethebank’sfirstexperienceofworkingasa‘group’ofcompanies.

IntheAsia-Pacificregion,keyadditionsweretheMercantileBankin1959,acontrollinginterestinHangSengBankLimitedin1965,andtheformationofWardleyLimitedin1972.TheMercantileBank,originallyestablishedastheMercantileBankofBombayasearlyas1853,haditsowndistinguishedhistoryinAsianbanking.WhenitsacquisitionbyTheHongkongandShanghaiBankingCorporationwascompletedin1959,theMercantileBankwasoperating35branches,withanespeciallystrongpresenceintheIndiansub-continentandMalaysia.TheMercantile’sheadofficewastransferredtoHongKongin1966,anditsbusinesswasthengraduallyintegratedintothelargerGroup.

HangSengBank,incontrast,wasalocalHongKongbankestablishedin1933.TheHongkongandShanghaiBankingCorporationobtainedacontrollinginterestin1965,shortlyafterbanksinHongKonghadfacedabriefperiodofcrisis.

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Right: The logo of Hang Seng Bank, introduced in 1954. Below: The staff of the Calcutta branch of the Mercantile Bank in 1938. The branch had opened for business in 1855.

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HangSeng,underitsownnameandmanagement,hassinceemergedwithgreatsuccessasthesecondlargestbankincorporatedintheHongKongSpecialAdministrativeRegion.

Notalltheseallianceswereincommercialbanking.In1972,anewwhollyownedcompany,namedWardleyLimitedafterthebank’soriginalheadquartersinWardleyHouse,wascreatedtoserveasamerchantbankingsubsidiary.WardleylaterdevelopeditsownseriesofsubsidiariesinfinancialcentresthroughoutAsia.In1981,italsoacquiredacontrollinginterestinEquatorHoldingsLimited,whosesubsidiariesoffermerchantandinvestmentbanking,tradeand

advisoryservicesinAfrica.In1995,aspartoftheGroup’sstrategyofadoptingaunifiedidentityforitsinvestmentbankingandcapitalmarketsactivities,theprincipalWardleybusinesseswererenamedandbroughttogetherasHSBCInvestmentBankAsiaLimited.

TheHongkongandShanghaiBankingCorporationcontinuedtoseeknewopportunitiesfordiversificationintheemergingmarketsoftheAsia-Pacificregion.Theglobalisationoftheeconomyinthe1980sand1990sopenedupfinancialmarketsthathadpreviouslybeenclosedtoforeignbanks.In1985,thebankobtainedabankinglicenceinAustraliaandthenestablished

Left: Label from the first current account ledger used at the London office of The Hongkong and Shanghai Banking Corporation in 1865.Below: A HK$25 note issued by The Hongkong and Shanghai Banking Corporation in Yokohama, Japan, in 1866.

HongkongBankofAustraliaLimitedinthefollowingyear(nowHSBCBankAustraliaLimited).Thebanktookfullownershipofthissubsidiaryin1987andalsoacquiredabankinglicenceinNewZealand.In1994,itwasthefirstforeignbanktoincorporatelocallyinMalaysia,formingHongkongBankMalaysiaBerhad(nowHSBCBankMalaysiaBerhad).

New directions in Asia-Pacific TheGrouphasextendeditsservicesonthemainlandsincethelate1970s,followingtheintroductionofChina’s‘opendoor’economicpolicyandinsupportofthecountry’sgrowinginternationaltrade.In1980,TheHongkong

andShanghaiBankingCorporationopenedarepresentativeofficeinBeijing.MoreofficesfollowedinChina’sothermajorcitiesand,in1984,itbecamethefirstforeignbanksince1949tobegrantedabankinglicence,allowingtheShenzhenofficetobeupgradedtoafullbranch.In1997(theyearinwhichthePeople’sRepublicofChinaresumedsovereigntyoverHongKong),HSBCwasoneofthefirstinternationalbankstobegivenpermissiontoconductrenminbibusinessinmainlandChina.Bythebeginningof2010,HSBChadthelargestnetworkofanyforeignbankwith99outlets.Thisnetworkhasbeensupplementedbyaseriesofstrategicpartnerships.In2001,an8percentshareintheBankofShanghaiwaspurchasedand,inthefollowingyear,HSBCacquireda10percentshareinPingAnInsuranceCompanyofChina,thesecondlargestlifeinsuranceoperatorinthecountry.

TherehasbeenmajorbusinessgrowthinIndia.2001sawtheopeningoftheonlybranchintheHSBCnetworkthatisopen365daysayearinPune,westernIndia,and,inthesameyear,HSBCwasabletoentertheinsurancemarketinIndiaforthefirsttime.TheGrouphasalsopioneeredtheuseofglobalresourcingcentrestoachieveacompetitiveadvantage.India’spoolofskilledworkershasmadeitanideallocationforsuchoperationsanditnowboasts10ofHSBC’s21

Opposite: Members of staff photographed outside the Kobe office of The Hongkong and Shanghai Banking Corporation in Japan in 1902. Above: View of Raffles Place, Singapore, in about 1919. The offices of the Mercantile Bank are situated in the centre, at the far end of the square. Left: The skyline of Sydney, featuring the top of HSBC Bank Australia’s head office in George Street. HSBC Bank Australia was established as a subsidiary in 1986.

servicecentres.ThesecentreshaveallowedHSBCtoutiliseitsworldwidereachbyofferingacost-effectivesolutiontoimprovingcustomerserviceonaninternationalbasis.

InadditiontoinvestingintheemergingmarketsofChinaandIndia,HSBChasalsostrengtheneditsbusinessesinsomeoftheotherfast-growingeconomiesoftheAsia-Pacificregion.In2008,HSBCannounceditsacquisitionofamajorstakeinIndonesia’sBankEkonomi;purchasedtheassets,liabilitiesandoperationsofTheChineseBankinTaiwan;andgainedapprovaltoestablishalocallyincorporatedsubsidiaryinVietnam.

TheHongkongandShanghaiBankingCorporationalsomaintaineditscommitmenttoitsbirthplaceasakeystrategicaim.Themostvisibledemonstrationofthiswasthebank’ssubstantialinvestmentinitsstrikingheadofficebuildingintheHongKongSAR,designedbySirNormanFosterandofficiallyopenedin1986.By2010,thebankwasoperatingover300branches,supportedbyanextensivenetworkofATMsandinternetbankingservices.RepresentedbythelargestbankintheHongKongSARandwithamajorpresenceonthemainland,HSBCmaintainsitspositionasoneoftheforemostfinancialinstitutionsinthedynamicmarketsoftheAsia-Pacificregion.

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Right: Night view of the modern headquarters of The Hongkong and Shanghai Banking Corporation in the Hong Kong SAR.Far right: Perspective view by William Walcot of the 1935 head office of The Hongkong and Shanghai Banking Corporation, designed by G L Wilson of Palmer and Turner.

HSBChasmaintainedapresenceinEuropesincetheopeningoftheLondonofficeofTheHongkongandShanghaiBankingCorporationinJuly1865.However,throughtheacquisitionofotherbanksandcompanies,theGroup’shistoryinthisregioncanbetracedbacktothelate18thcentury.ItwastheacquisitionofMidlandBankplc(nowHSBCBankplc)in1992whichtransformedHSBC’srepresentationinEurope,placingitamongtheleadingfinancialinstitutionsintheworld.TheGroup’spositionwasconsolidatedstillfurtherwiththeacquisitionofCréditCommercialdeFranceS.A.(nowHSBCFrance)in2000.

Origins of Midland Bank, 1836MidlandBank,whichopenedforbusinessinUnionStreet,Birmingham,inAugust1836,wastheinspirationofitsfirstmanager,CharlesGeach.HavingleftasecureappointmentattheBankofEnglandtotakeupthechallengeofcommercialbanking,GeachhadthebusinesssupportandcapitalbackingofleadingmerchantsandmanufacturersinBirmingham.ThetownanditsregionwerethehomelandoftheIndustrialRevolutionandthenewbankbeganbusinessinathrivingbuthighlycompetitivelocaleconomy.

Inthe1830sand1840s,MidlandoccupiedanimportantnicheinBirminghambusiness,particularlyinthediscountingofbillsofexchangeforitscustomers.Linkswithlocalindustrialandcommercialconcernswereespeciallystrongand,bythe1850s,thebank’scustomersincludedrailways,ironfoundersandengineeringconcerns,utilitiesandmunicipalcorporations.MidlandestablisheditsfirstbranchesbyacquiringStourbridgeOldBankin1851andNichols,BakerandCraneofBewdleyin1862.BothfirmshadbeenpioneersofbankingintheWestMidlands:theoriginsoftheStourbridgebankcanbetracedbackto1762andtheBewdleybankdatedfrom1777.

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Right: Charles Geach, founder and first manager of Midland Bank in 1836.Below: Extract from the deed of settlement establishing Midland Bank in August 1836.

HSBC in Europe

Acquisitions and developmentInitsfirst50years,MidlandsteadilyenlargeditsbusinessinBirminghamandthesurroundingregion.Fromthe1880s,itexpandeditscustomerbasebyopeningnewbranchesandbyacquiringotherbanks.Itsmostimportantinitiativewasthedecisiontomoveintothewidernationalmarket.Thiswasachievedin1891bytheacquisitionoftheCentralBankofLondon(whichgaveMidlandaseatintheLondonClearingHouse)and,in1898,bytakingovertheCityBank(whichprovidedaLondonheadoffice).By1918,withdepositsof£335million,itrankedasthelargestbankintheworld.ThekeyfigureinthisremarkableadvancewasEdwardHolden,ManagingDirectorfrom1898to1908andChairmanandManagingDirectorfrom1908untilhisdeathin1919.Heoversawmorethan20bankamalgamationsbetween1891and1918,andopenednewbranchesthroughoutEnglandandWales.

HoldenalsoencouragedthedevelopmentofMidland’sinternationalbusiness;itwasthefirstBritishbanktosetupaforeignexchangedepartmentand,by1919,itwasactingasLondonbanktosome650correspondentbanksthroughouttheworld.From1907,thesecorrespondentsincludedTheHongkongandShanghaiBankingCorporation.

AftertheFirstWorldWar,theleadingBritishbanksenteredanagreementwiththegovernmentthattheywouldnotattemptfurtheramalgamationswithoutTreasuryapproval.Asaresult,Midlandturneditsattentiontoexpandingitsbranchnetwork,addingnewbankingservices,mechanisingitssystems(from1928)andadvertisingitsactivities.

Above: The banking hall and counter of the Pall Mall branch of the London Joint Stock Bank in the 1850s, from a watercolour by E H Martineau. This bank became part of Midland in 1918.Left: Bust of Sir Edward Holden, who led Midland Bank to become the biggest bank in the world by 1918.

Post-war recovery and international alliancesTheendingofcreditrestrictionsin1958broughtrenewedcompetitionintoBritishbanking.Midlandrespondedbyextendingitsbranchnetworkandbyintroducingaseriesofinnovativeservices,includingpersonalloans(1958),personalchequeaccounts(1958)andchequecards(1966).

Atthesametime,thebankdiversifieditsinterestsawayfromtraditionalcommercialbanking.ForwardTrust,whichwasacquiredin1958,emergedasaleaderininstalmentfinance,leasingandfactoringservices.Midland’spurchasein1967

ofashareinMontaguTrust,theownerofSamuelMontagu&Co.Limited,wasthefirstassociationbetweenaBritishclearingbankandaLondonmerchantbank.SamuelMontagu,withitsowndistinguishedhistorydatingbackto1853,becameawhollyownedsubsidiaryin1974andisnowpartofHSBC’sprivatebankingbusiness.Furtherdiversificationfollowedin1972,whenMidlandwastheleadingmemberoftheconsortiumthatacquiredtheThomasCooktravelbusiness.Afterbecomingsoleownerin1977,Midlandsolditsinterestin1992,butcontinuedthelinkformanyyearsbyofferingThomasCookservicesthroughthebranchnetwork.

Until1974,Midland’soverseasbusinessrelieduponitstraditionallinkswithcorrespondentbanksand,inthe1960s,membershipofanumberofconsortiaofEuropeanandinternationalbanks.From1974,theemphasisswitched,firsttoopeningbranchesorrepresentativeofficesinthemajorfinancialcentresoftheworldand,second,toacquiringinternationalsubsidiaries.Oftheseinitiatives,thepurchaseofamajorityshareinCrockerNationalofCalifornia,USA,in1981provedtobeaserioussetbacktoMidland’sfortunes.AfteraseriesofheavylossesbytheCalifornianbank,Midlandtookfullownershipin1985andthensoldCrockertoWellsFargothefollowingyear.

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Right: Illustration of Bewdley, Worcestershire in about 1890. The business of Midland Bank’s branch (centre) can be traced back to the foundation of Nichols, Baker and Crane in 1777.Below: The coat of arms blazon granted to Midland in 1952. The bank’s motto is visunitafortior — strength united is yet stronger.

MidlandBankenjoyedgreatersuccesswithinvestmentinGermany,wherethefocusofactivitywasTrinkaus&BurkhardtKGaA,aprivatebankwithalonghistoryofitsown.In1785,ChristianGottfriedJaegerfoundedatradingcompanyinDüsseldorf,whicheventuallypassedtohisnephew,ChristianGottfriedTrinkaus.Trinkausdevelopedthefirmintoabankandgaveithisownname.In1972,CGTrinkausmergedwiththebankinghouseBurkhardt&Co,whichhadbeenfoundedinEssenin1841,andoperationswereextendedtoLuxembourgandSwitzerland.MidlandBankacquiredacontrollinginterestin1980and,today,asHSBCTrinkaus&BurkhardtAG,thecompanyenjoysaleadingpositioninbothcommercialandinvestmentbanking.ThroughtheacquisitionofSamuelMontagu&Co,MidlandhadalsogainedamajorityshareinGuyerzellerBankAG(nowHSBCGuyerzellerBankAG)inSwitzerland.

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Left: The interior of Midland Bank’s branch in Kendal in the 1890s. The wood panelling, stained glass and counter lamps were all typical features of branch premises during the 19th century and the first half of the 20th century. Below: The first general ledger of Christian Gottfried Jaeger’s trading house, established in Düsseldorf in 1785. The firm was the forerunner of HSBC Trinkaus & Burkhardt AG, the Group’s principal subsidiary in Germany.

Midland joins HSBC TheHongkongandShanghaiBankingCorporationacquireda14.9percentequityinterestinMidlandBankin1987,andastrongworkingrelationshipdeveloped.ThemostimportantinnovationduringthisperiodwasthelaunchofFirstDirectin1989.FirstDirectpioneeredtherevolutionaryconceptoftelephonebanking,withaperson-to-personserviceavailable24hoursaday,365daysayear.Itnowoffersinternetbankingaswellandservesmorethanonemillioncustomers.

In1992,HSBCHoldingsplcacquiredfullownershipofMidlandBank.Itwasoneofthelargestacquisitionsinbankinghistory,givingHSBCthemajorfootholdinEuropethatitneededtocomplementitsexistingbusinessinAsiaandtheAmericas.MidlandwasrenamedHSBCBankin1999aspartoftheadoptionoftheHSBCbrandthroughouttheGroup.

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Right: Front cover of a marketing leaflet issued by First Direct, which had pioneered telephone banking in 1989. Below: Night view of CCF’s headquarters in Paris. The building was illuminated during 1994 as part of the bank’s centenary celebrations.

Origins of CCF, 1894ErnestMéjàandBenjaminRossierfoundedBanqueSuisseetFrançaiseat27,rueLaffite,Paris,on1July1894.TheyhadpreviouslyworkedtogetherforBanqueFédéraleS.A.andtheirnewfirmbeganbytakingoverthebusinessoftheSwissbank’sParisbranch.MéjàremainedasjointmanagingdirectorofthebankwithRossieruntilhisdeathin1910.Rossierthencontinuedtorunthebankuntilhisretirementin1936.Bothmen’svaluablecontributionstotheFrencheconomywererecognisedwhentheyweremadechevaliersoftheLégiond’honneur.

Fromitsearlydays,BanqueSuisseetFrançaisetookanactiveinterestincommerceandindustry.AsuccessfulworkingrelationshipwasdevelopedwiththeParisdepartmentstoreGaleriesLafayette.ThebankalsohelpedfundtheconstructionofthenewMétropolitainundergroundsystemandtheinstallationofpubliclightinginthecapital.Theearlysuccessofthebusinessledtoconsiderableexpansion.Thenumberofemployeesrosetenfoldbytheturnofthecentury,andthebankmovedtolargerheadquartersat20,rueLaFayette.From1912,thebankbegantodevelopabranchnetwork,with14officesopeninginParisandafirstprovincialofficeinLille.AnofficewasalsoacquiredinMarseilleswhenthebusinessofBanqueduColombierwastakenoverin1914.

The creation and development of CCFInJanuary1917,thebank’sshareholdersapprovedaproposedmergerwiththeLyons-basedMaisonAynardetFilsandCaissedeCréditdeNice.MaisonAynardetFilshadstartedoutasadrapers’companyintheearly18thcentury,beforeturningtobankingin1858.Establishedin1865,CaissedeCréditdeNicehadopenedanumberofbranchesalongtheMediterraneancoastandinItaly.TheresultingbusinessadoptedthenameCréditCommercialdeFrance(CCF).Twoyearslater,thebusinessoftheBanquedeBordeauxwasalsoacquired.

In1922,thebank’scentralmanagementandmainservicesweretransferredto103,avenuedesChamps-Elysées.Stilltheheadquartersofthebanktoday,theseformerhotelpremisesofferedaprestigiouslocationfromwhichCCFconsolidateditsstandingontheFrenchbankingscene.Thecompanycontinuedtoexpandthroughtheacquisitionofotherbanksand,bytheendofthedecade,ithadbecomethesixthlargestbankinFrance.

Inthe1960s,duringthechairmanshipofJacquesMerlin,CCFembarkeduponapolicyofconsiderableexpansion,withthenumberofbranchesrisingtomorethan200.Thebank’sindustrialaffairsdepartmentandinternationaldepartmentwerealsofoundedduringthisperiod.In1979,thelong-runningadvertisingcampaign,‘TheBankofsuccess’,waslaunched,whichboostedthenumberofshareholdersfrom17,000to34,000.Threeyearslater,thebankwasnationalisedbytheFrenchgovernmentbutthisdecisionwaslaterreversedandCCFwasprivatisedonceagainin1987.

CCF joins HSBCCCFwasoperatingwith650branchesandassetsofv69billionbytheendofthe20thcentury.InApril2000,HSBCHoldingsplcannounceditsintentiontoacquirethebankandthedealwascompletedinJuly.Thatmonth,HSBCHoldingsplcwaslistedontheParisStockExchangeforthefirsttime.TheacquisitionofCCF(nowHSBCFrance)hasenabledHSBCtobuildastrongplatformforgrowthwithintheEurozone.In2008HSBCFrancesolditssevenregionalbankingsubsidiariestoallowittofocusonthosepartsofthebusinesswhereHSBC’sinternationalconnectivitygivesitcompetitiveadvantage.

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Below and overleaf: CCF posters advertising liberation and reconstruction loans, which were issued in France following the end of the First World War.

Other European connectionsHSBCcanclaimlongexperienceofEuropeanmarketsinadditiontotheconnectionsdevelopedbyMidlandandCCF.TheLondonofficeofTheHongkongandShanghaiBankingCorporationwasopenedwithinafewmonthsofthebank’sfoundingin1865,anditcontinuedtoplayakeyroleinbusinessandmanagementdevelopment.ThebankwasthefirstforeignbanktoopenbranchesinLyons(1881)andHamburg(1889).BoththeMercantileBankandTheBritishBankoftheMiddleEastalsomaintainedLondonoffices.

Inthe1980s,thederegulationoftheLondonStockExchange—‘BigBang’—gavebankstheopportunitytoenternewfinancialmarkets.InthecaseofTheHongkongandShanghaiBankingCorporation,thiswasachievedbytheacquisitionofJamesCapel&Co.Limitedin1986.Establishedinthe1770s,Capelprovidedaccesstocapitalmarketsandsecuritiesactivities.ThisbusinesswassubsequentlyintegratedintoHSBC’sinvestmentbankingbusiness.

InJune1999,HSBCacquiredamajorityshareholdinginMalta’sMid-MedBankp.l.c.(nowHSBCBankMaltap.l.c.),thelargestcommercialbankontheisland.Twoyearslater,HSBCBankplcacquiredDemirbankTAS,thefifthlargestprivatebankinTurkey.ThisbusinesshassincebeenmergedintoHSBCBankA.S.,whichhadfirstenteredtheTurkishmarketin1990.Morerecently,HSBChasincreaseditsactivitiesinCentralandEasternEuropeandintopartsofCentralAsia,openingnewofficeandofferingnewservicesinAustria,Poland,theCzechRepublicandKazakhstan.ThesedevelopmentshavecontributedtoHSBC’sstrategyofbuildingastrong,diversifiedrepresentationthroughoutEurope.

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Far left: Handbook of prices on the London Stock Exchange used by the founder of James Capel in the 1770s. Left: Headquarters of HSBC Bank Malta p.l.c. in Valletta. Below: Advertisement by HSBC Bank A.S. in Turkey, using the Group theme of the importance of local knowledge. The advertisement also shows money through the ages and features the bank’s popular Advantage card.

WhenHSBCacquiredTheBritishBankoftheMiddleEastin1959,itgainedentrytooneofthemostdiverseandrapidlychangingfinancialmarketsintheworld.ItsnewsubsidiarywasamongthelargestandmostexperiencedbankingcompaniesintheMiddleEast.

Origins, 1889TheBritishBankoftheMiddleEast,nowcalledHSBCBankMiddleEastLimited,wasestablishedinLondoninSeptember1889.OriginallyknownastheImperialBankofPersia,thenewcompanybeganlifeasbankertotheimperialgovernmentofPersia.Earlierin1889,BaronJuliusdeReuter,afounderofthebank(andalsothecreatorofReuters),hadobtaineda60-yearbankingconcessionfromtheShahofPersia,whichallowedthenewbanktoissuenotesaswellastoactasthestatebankofPersia.Unusuallyforanoverseasbankatthattime,theImperialBankwasalsograntedaRoyalCharterbytheBritishgovernment.

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Right: The official seal of the Imperial Bank of Persia. The lion and sun emblem also featured on the notes issued by the bank.Below: Postcard of Tehran in 1938, showing the chief office of the Imperial Bank of Iran (formerly the Imperial Bank of Persia).

HSBC in the Middle East

TheImperialBankofPersiafirstopenedforbusinessinTehraninlate1889.Ayearlater,ittookoverthePersianbusinessoftheNewOrientalBankingCorporationand,between1890and1893,itopenedsevenbrancheselsewhereinthecountry.Initially,thebankwashandicappedbytheinternationalweaknessofsilver—Persia’smonetarystandard—but,from1896untiltheFirstWorldWar,thebankplayedanincreasinglyimportantroleasthestatebankandintheexchangemarkets.Commercialbankdepositsgrewsteadilyand,bythe1920s,thebankhadopened26branches.

Diversification in the Middle EastInthe1930sand1940s,politicalchangeinPersiatransformedtheoutlookfortheImperialBank.In1930,forexample,theissueofbanknoteswastransferredtoBankMelliIran,whichhadrecentlybeenestablishedasthePersiannationalbank.WhenthecountrychangeditsnametoIran,theImperialBankwasrenamedtheImperialBankofIranin1935.Then,in1949,foreignbankswererequiredtotransfer55percentoftheirdepositstotheIranianstatebank.Twoyearslater,thebank’sforeignexchangepermitwaswithdrawn,leavinglittleoptionbuttoclosethechiefofficeinTehran.

Thesemomentouschangesrequiredthebanktoremodelitsstrategyandreorganiseitsrepresentation.Theprocesswasalreadyunderwayintheearly1940s,whentheImperialBankpioneeredbankingintheGulfstates.Inthisregion,bankingwastoplayavitalroleinthedevelopmentoftheoilindustryintheMiddleEast.BrancheswereopenedinKuwait(1942),Bahrain(1944),Dubai(1946)andMuscat(1948).Similarly,brancheswereopenedinthecitiesofthe‘fertilecrescent’—Beirut(1946),Damascus(1947)andAmman(1949).ThisdiversificationthroughouttheMiddleEastwasreflectedinthechangeofnamein1949toTheBritishBankofIranandtheMiddleEast.FollowingthewithdrawalfromIran,in1952thebankobtainedanewRoyalCharterundertheshorternameofTheBritishBankoftheMiddleEast.

Regional expansion and Group alliancesThestrategyofregionalexpansionwassuccessfullymaintainedinthe1950s.By1959,whenthebankwasacquiredbytheGroup,ithadaddedofficesinSaudiArabia,Aden,Libya,Sharjah,Qatar,Tunisia,MoroccoandAbuDhabi.From1959,thebankwasagainrepresentedinIranbutthisreturnendedwhenthecountry’sbankswerenationalisedin1979.

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Above: Portrait of Baron Julius de Reuter. He founded the Imperial Bank of Persia in 1889, having obtained a 60-year banking concession from the Shah of Persia.Left: The coat of arms of The British Bank of the Middle East, granted in 1957.

NationalisationofthebankingindustrywasacontinuingfactorintheMiddleEastfromthe1960sand,asaresult,thebankendeditspresenceinSyria,Iraq,AdenandLibya.Elsewhere,andespeciallyintheoil-richeconomiesoftheGulf,thebankreinforceditsbranchnetworkorenteredlocalbankingalliances.In1978,forinstance,thebank’sbusinessinSaudiArabiawastransferredtoanewbank,TheSaudiBritishBank,inwhichtheGrouptooka40percentshareholding.TheGroupalsoinvestedintheHongkongEgyptianBankS.A.E.,whichwasestablishedin1982andinwhichtheGrouptooka40percentshare.

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Above: A 1,000 toman note printed by the Imperial Bank of Persia in about 1890.Right: An extract from a staff register of the Imperial Bank of Persia, noting officers’ movements between branches in the 1920s.

In1994,theheadofficeofTheBritishBankoftheMiddleEastwastransferredtoJerseyand,in1999,thebankwasrenamedHSBCBankMiddleEast.TheinvestmentintheEgyptiansubsidiarywasincreasedto90percentin2001,andthebankwasrenamedHSBCBankEgyptS.A.E.

HSBChaspioneeredservicesandproductsintheregion,buildingonitsinternationalcapabilityandglobalreach.Aninnovativerangeofproducts,availablethroughHSBCAmanahFinance,allowsHSBCtoprovideviableIslamicalternativestoconventionalfinance.Withthisrangeofinterests,HSBCisoneoftheleadingbankingandfinancialservicesorganisationsintheMiddleEast.

Above: Staff at the Tehran office of the Imperial Bank of Persia in about 1920. Right: Members of staff at work in the offices of The Saudi British Bank, an associated company of the HSBC Group, established in Riyadh in 1978.

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HSBC’sinterestsintheAmericasencompassboththematuremarketofNorthAmericaandtheemergingmarketsofSouthandCentralAmerica.In1980,theGrouppurchaseda51percentinterestinMarineMidlandBanks,Inc,aleadingregionalbankwithitsheadquartersinBuffalo,NewYork.ThismarkedamajorcommitmenttobankingandfinancialservicesinNorthAmerica,leadingtofullownershipofMarineMidlandin1987.HSBChasbuiltpurposefullyonthese

foundations,notablyinitsacquisitionofRepublicNewYorkCorporationin1999.Attentionhasalsobeenfocusedontheemergingmarketssouthoftheborder,withaseriesofacquisitionsincreasingHSBC’spresenceinLatinAmerica.ThesebusinessesarenowamajorcontributortoHSBC’sprofits.

Early links with North AmericaTheHongkongandShanghaiBankingCorporationalreadyhadlengthyexperienceintheNorthAmericanmarkets.AnagencywasopenedinSanFranciscoin1865,theyearofthebank’sestablishment.Thatofficebecameafullbranchin1875and,fiveyearslater,abranchwasopenedinNewYorkCity.Itwasnotuntilthe1950s,however,thatthebankconsideredoperatingitsownsubsidiaryintheUnitedStates.ThebusinesspotentialofCaliforniawasespeciallystrongand,in1955,awhollyownedsubsidiary,TheHongkongandShanghaiBankingCorporationofCalifornia,wasincorporatedlocally.Bythe1970s,ithadbecomeclearthatthissubsidiaryhadonlylimitedroomforgrowthandthebankdecidedthatastakeinalargeexistingAmericanfinancialinstitution—MarineMidlandBanks,Inc—offeredmorescopeforexpansion.ThebusinessoftheCaliforniansubsidiarywasthenwounddown.

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Above: The former branch of The Hongkong and Shanghai Banking Corporation in San Francisco, where the bank has been represented since 1865.Right: J P Wade Gard’ner, New York agent of The Hongkong and Shanghai Banking Corporation, at his desk in 1917. The bank had maintained a New York agency since 1880.

HSBC in the Americas

Origins, 1850MarineMidland’shistorydatesbackto1850,whentheMarineTrustCompanyopenedforbusinessinBuffalo,NewYork.ThebankwasformedtofinancethetradeingrainbetweentheMid-West,theGreatLakesandtheeasternseaboard.Overthenexthalfcentury,NewYorkStatewastransformedfromanagrariantoamanufacturingeconomy.Anetworkofrailwayswasbuilt,criss-crossingthestateandbringingwithitnewbusinessopportunities.Anironindustrygrewup,centredonTroy,andtheharnessingofwaterpowerinNiagaraledtothecreationofelectro-chemicalandelectro-metallurgicalindustries.Localbanksspranguptoprovidethefinancialservicesneededbytheseburgeoningindustries,althoughstatelegislationpreventedthemfromexpandingthroughoutthestate.By1918,theboardofMarineMidland,thenknownasMarineNationalBank,wasincreasinglyfrustratedbytheselegislativerestrictionsandsovotedtoconvertMarineintoastatecharteredtrustcompany.ThisnewstatecharterallowedMarinetomergewithseveralBuffalobanksduringthe1920s,becomingthefirstbankintheareatosetupbrancheswithinthecitylimits.

Incorporation and banking affiliationsUndertheleadershipoftheRandfamilyintheearly20thcentury,MarinebecameastatewidebusinessandthelargestbankingoperationwithinthestateoutsideNewYorkCity.Furtherexpansionbecamepossiblewhen,inOctober1929,MarinewasincorporatedandlistedontheNewYorkStockExchangeasMarineMidlandCorporation(laterknownasMarineMidlandBanks,Inc).TheadditionofMidlandtothetitle

reflectedthecompany’sgeographicalextensionintothe‘midlands’ofNewYorkStatebygroupingtogetheranumberofbankswithinthestate.

From1929,Marinepioneereditsroleasamulti-bankholdingcompanyand,inall,almost80localbanksbecamepartofMarineMidlandCorporation.Duetostatelaw,theseaffiliatedbankscontinuedtooperateasseparateentities,eachwiththeirowncapital,personnelandboardofdirectors,buttheyoperatedwithacommonpurposethroughthecentralleadershipoftheCorporation.TheoldestfinancialinstitutiontojointhegroupwastheFirstBankandTrustCompany,foundedinUticain1812.

MarineMidland’scommercialandretailbankingservicescontinuedtoexpandaftertheSecondWorldWar.Furtheracquisitionsweremadeandwerelatergroupedinto10affiliatebanksinNewYorkState.These,inturn,werebroughttogethertocreateasinglesubsidiarywhentheNewYorkStatelegislatureendeditscentury-oldrestrictiononbranchbankingin1976.Theunifiedbank,namedMarineMidlandBank,withtotalassetsofUS$10.5billion,wasoneofthelargestbankingamalgamationsofitskindintheUnitedStates.

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A US$1 banknote issued by the Marine Bank in Buffalo in 1850.

Marine Midland joins HSBCAfterbecomingawhollyownedsubsidiaryin1987,MarineMidlandBanks,Inc(renamedHSBCAmericasInc.in1995)concentratedonreorganisingitsoperationstofocusoncorebusinesses.Thebank’spersonalandcommercialbusinesseshavebeenenhancedbyastringofacquisitionsthathaveincreaseditsmarketshare.In1996,thebankacquiredthebusinessoftheEastRiverSavingsBank.In1997,thepurchaseoftheFederalSavingsandLoansAssociationofRochesterwascompletedand,in1999,thebranchesoftheFirstCommercialBankofPhiladelphiawereaddedtothenetwork.TheseacquisitionswerecomplementedbytheconsolidationoftheGroup’sactivitiesintheregion.TheNewYorkCitybranchesofbothHangSengBankandTheHongkongandShanghaiBankingCorporationweretransferredtoMarineMidlandBankin1995-96,aswerethecorporatebankingunitofMidlandBankandConcord,theequipmentleasingcompany.

Nationally,MarineMidlanddirecteditseffortstowardsbecomingamajorcompetitorinselectedfinancialservices,includingcreditcardprovision,mortgageservicing,studentlendingandcommercialfinance.Thebank’smembershipoftheHSBCGroupgaveitanadvantageoverotherregionalbanks,withitsaccesstointernationalmarkets,productsandtechnology,whichenhancedMarine’scapabilitiestoserveits

corporatecustomers(especiallyintradefinance).Technologyalsoboostedsuchservicesasdrive-throughbankingandPCbanking.In1999,aspartoftheGroup’sworldwideadoptionoftheHSBCbrand,MarineMidlandBankwasrenamedHSBCBankUSA,andtheholdingcompanyHSBCAmericasInc.wasrenamedHSBCUSAInc.

Republic New York CorporationLaterin1999,HSBC’srepresentationinNewYorkwassubstantiallyenhancedbytheacquisitionofRepublicNewYorkCorporation.Thecorporation’sfoundercompany,theRepublicNationalBankofNewYork,wastheinspirationofEdmondJSafraand,whenthebankopenedforbusinessin1966,itsinitialcapitalisationofUS$11millionwasarecordforaprivatecommercialbankatthattime.Inthelastquarterofthe20thcentury,RepublicgreatlyexpandeditsactivitiesinNewYork.In1975,itmergedwithKings-LafayetteBankandthenacquiredWilliamsburghSavingsBankin1987andtheManhattanSavingsBankin1990.WhenthecompanybecamepartofHSBC,theunitedoperationsofRepublicNationalBankofNewYorkandHSBCBankUSAcreatedthethirdlargestdepositoryinstitutioninNewYorkStateandtenthlargestbankintheUnitedStatesbasedonassets.

The acquisition of HouseholdTheacquisitioninMarch2003oftheconsumerfinancecompany,HouseholdInternational,Inc.,significantlyincreasedHSBC’sbusinessinNorthAmerica.ThetransactionaddednationalcoverageintheUnitedStatesforconsumerlending,mortgagefinancing,creditcardsandcreditinsurance,andmarkedthemostsignificantchangeintheshapeofHSBCinmorethanadecade.

HouseholdInternationalwasfirstestablishedin1878,makingittheoldestconsumerfinancecompanyintheUnitedStates.ItbeganlifeinaMinneapolisjewellerystorewhenthebank’s

28

Right: Senator Robert F Kennedy cuts the ribbon at the grand opening ceremony of the Republic National Bank of New York in 1966. The company became part of HSBC in 1999.Opposite:An artist’s impression of the new offices of the Marine Trust Company of Western New York in Buffalo in about 1960. The business was affiliated to the Marine Midland Corporation.Below: Edmund Safra, founder of Republic National Bank of New York.

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founder,FrankJMackey,offeredthefirstunsecuredpersonalloanstopeopleofaveragemeans.In1883,thefirstbranchofficewasopenedatStPaul,Minnesota.

Thebank’searlyyearsweremarkedbystronggrowthandinnovation.In1894,anetworkof14brancheshadbeenestablishedthroughouttheMid-Westand,tocentraliseoperations,thebankmoveditsheadquartersfromMinneapolistoChicago,Illinois.Theyoungcompanywasapioneerinitsfield,introducingin1898thefirstmonthlypaymentplanforcustomerstorepaytheiroutstandingloans.FollowingincorporationasHouseholdFinanceCorporationinthe1920s,thebankbecamethefirstconsumerfinancecompanytoofferstocktothepublicandbelistedontheNewYorkStockExchange.

Thethirdquarterofthe20thcenturysawHouseholddiversifyintomerchandising,transportationandmanufacturing,aswellasthecontinuedgrowthofitscorebusiness.ThecreationofHouseholdRetailServicesinthe1970sallowedthebanktoexpandintorevolvingcredittofinancepurchases.In1973,selectedretailbankingservicesandloanswereextendedtotheUnitedKingdomthroughtheformationofHFCBank.

AfterHSBCpurchasedHouseholdin2003itcontinuedtoofferconsumerfinanceandcreditcardsthroughouttheUnitedStates,andwasrenamedHSBCFinanceCorporationin2004.However,by2007itwasbecomingobviousthat

thetroubledstateoftheUShousingmarketwashavinganegativeimpactondebtrepayment,andthedecisionwastakentoscalebackbusiness.HSBCalsotooktheunprecedentedstepofissuingatradingstatementearlyin2007warningthemarketofthescaleofbaddebtsintheUSsub-primesector.2008sawextraordinaryturbulenceintheworld’sfinancialmarkets,andalthoughHSBCwasabletoweatherthestorm,itwasnotcompletelyuntroubledbyitseffectsandaftermath.In2009HSBCannouncedthatitwouldwritenofurtherconsumerfinancebusinessthroughtheHFCorBeneficialbrands,andwouldrunoffexistingbusiness.

HSBC in CanadaTheHongkongandShanghaiBankingCorporationfirstgainedadirectpresenceinCanadain1981,whenHongkongBankofCanadawasestablishedasawhollyownedsubsidiary.ThechoiceofVancouverastheheadofficeofthebankwasinlinewithHSBC’sspecialinterestintheeconomiesofthePacificrim.Thenewsubsidiaryhasgrownbothorganicallyandthroughacquisition:purchasesincludeBankofBritishColumbia(1986),LloydsBankCanada(1990),ANZBankofCanada(1993),BarclaysBankofCanada(1996),andNationalWestminsterBankofCanada(1998).WithintheGroup,thebusinessofMidlandBankCanadawastransferredtoHongkongBankofCanadain1988,BBNJamesCapelInc.wasacquiredin1995,andtheMarineMidlandbranchesinSeattleandPortlandjoinedtheCanadianbank’snetworkin1996.By1999,whenitwasrenamedHSBCBankCanada,thebankwasoperatinganetworkof116branches.

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Right: Front cover of a publication issued by the research department of Household in 1932.Below: Alfonso Ottiz Mena and Don Luis Montes de Oca, founders of Bital, at the bank’s annual festival in Mexico City in 1946.

HSBC in Central AmericaWhen,inNovember2002,HSBCacquiredGrupoFinancieroBital,S.A.deC.V.ofMexico,itaddedamajorfinancialservicesgrouptoitspresenceinNorthAmerica.GFBital’sfoundingmember,BancoInternacional,S.A.,hadbeenestablishedasacommercialbankingoperationinMexicoCityon20August1941.InDecember1980,BancoInternacionalmergedwith11otherlong-establishedbanksinMexico.Theoldestbankinthisamalgamation,BancodeCoahuila,hadbegunlifein1933.

Theunitedbank,underthenameofBancoInternacionalandlaterGrupoFinancieroBital,developednationwidebanking,bondingandbrokerageoperations.ItjoinedHSBCwithanetworkofnearly1,400branchesandsixmillioncustomers,thelargestpersonalcustomerbaseinMexico.

HSBChasfurtherstrengthenedandconsolidateditspositioninCentralAmericathroughthepurchaseofGrupoBanistmoin2006.BanistmowasCentralAmerica’sleadingfinancialservicesorganisationandincludedPanama’slargestbankandinsurancecompany.Itsnetworkof100officestookHSBCintonewpasturesintheregionsuchasNicaragua.

HSBC in South AmericaThroughitsholdingsinMarineMidlandandMidlandBank,HSBCacquiredofficesinCentralandSouthAmericathathadbeenestablishedinthe1960sand1970s.Fromthe1990s,HSBCaddedtothisrepresentationwithanambitiousprogrammeofexpansioninsupportofgrowingintra-regionalandinternationaltradeflows.

In1987,MidlandBankhadtakenashareholdinginBancoRobertsS.A.inArgentina.ThisinterestpassedtotheGroupandwasincreasedtofullownershipinAugust1997,whenthenamewaschangedtoHSBCBancoRobertsS.A.(nowHSBCBankArgentinaS.A.).BancoRobertshadbegunlifeinBuenosAiresin1903,andexpandeditsintereststhroughoutthe20thcentury.In1918,itacquiredacorporateinsuranceorganisation,theImperial,renamingitLaBuenosAiresCompañíaArgentinadeSegurosS.A.OthersubsidiariesincludedMáximaS.A.,launchedin1994,thesecond-largestprivatepensionproviderinthecountry,andDocthosS.A.,foundedinthelate1970stoprovidepre-paidhealthcare.

HSBC’spresenceinSouthAmericahasbeenreinforcedbyanumberofotheracquisitions,addingtoitsvariedrangeofintereststhroughouttheAmericas.InChile,theGroup’sbusinesswasrationalisedthroughashareholdinginBancoO’Higgins.Thebankwasfoundedin1956,butpartsofthebusinesscantracetheiroriginsbackto1888.InJanuary1997,BancoO’HigginsmergedwithBancodeSantiago.NamedBancoSantiago,thenewbankbecamethelargestprivatelyownedcommercialbankinChile,andisnowknownasHSBCBank(Chile).

HSBC’slargestpresenceinSouthAmericawasestablishedinMarch1997,whenBancoHSBCBamerindusS.A.wassetuptotakeovertheassets,liabilitiesandsubsidiariesofBancoBamerindusdoBrasilS.A.Thisbankhadbeenestablishedin1952asBancoMercantileIndustrialdoParaná,withitsheadofficeinCuritibaandabranchinItararé.Rapidexpansionanddiversificationfollowed,withthebankhavingalmost1,300branchesbythetimeofitsacquisition,plussignificantinsurance,leasingandsecuritiesbusinesses.Thebank’scorporateandregionaloperationsarenowlocatedinSãoPaulo,whereithassetupnewbusinessunitsdealingwithvehiclefinanceandproperty.Thebank’snamewaschangedtoHSBCBankBrasilS.A.-BancoMúltiploin1999.

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Left: The head office of Bital in Mexico City in the 1960s.Below: Palácio Avenida, the headquarters of HSBC Bank Brasil S.A.-Banco Múltiplo in Curitiba. The business, which can be traced back to 1952, became part of the HSBC Group in 1997.

The making of the modern HSBC GroupWhenTheHongkongandShanghaiBankingCorporationacquiredtheMercantileBankandTheBritishBankoftheMiddleEastin1959,itlaidthefoundationsoftoday’sHSBCGroup.Intheseacquisitionsand,bythelaterinvestmentinHangSengBankin1965,thebankgrewanddiversifiedthroughsubsidiarycompanieswiththeirownexperienceandexpertise.

Inthelate1970s,this‘group’approachwasakeyfactorinthestrategyforexpansioninmarketswherepreviouslyTheHongkongandShanghaiBankingCorporationwasnotwellrepresented,particularlyinNorthAmericaandEurope.IntheUnitedStates,thisexpansioncentredonthepurchaseofa51percentshareholdinginMarineMidlandBankin1980.Thispurchase,atacostofUS$314million,nearlydoubledtheGroup’sassets,fromHK$128billiontoHK$243billion.TheremainingshareswerepurchasedinDecember1987,makingMarineMidlandtheGroup’sprincipalsubsidiaryintheUnitedStates.

InEurope,TheHongkongandShanghaiBankingCorporationsoughtapartnershipsimilartoitsinvestmentinMarineMidland.In1981,itsplanstoacquiretheRoyalBankofScotland,counteringabidfromStandardCharteredBank,werethwartedwhentheUKMonopoliesandMergersCommissionruledagainstbothbids.Sixyearslater,however,thebanksignalleditscontinuinginterestinthemajorBritishbankswhenitpurchaseda14.9percentinterestinMidlandBank.Aco-operationagreementbetweenthebankandMidlandallowedthetwobankstoconsolidateandrationalisetheirinternationalactivitiesbyreciprocaltransfersofbusinessas,forexample,thetransferofMidlandBankCanadatoHongkongBankofCanadain1988.

TheformationofHSBCHoldingsplcin1991,creatingaholdingcompanyfortheentireGroupwithitssharesquotedinLondonandHongKong,showedthattheGroupviewedEurope,andtheLondonmarketinparticular,asavitalpartofitsfuturedevelopment.Thisstrategywasmadeclearwhen,inMarch1992,HSBCHoldingsannouncedthatitwouldmakearecommendedofferforfullownershipofMidland.InlateAprilLloydsBank,oneoftheotherBritishclearingbanks,indicatedthatitwasalsoconsideringanofferforMidland.ThatpossibleofferwasdroppedshortlyafterHSBCannounceditsfinalofferinJune1992,valuingMidlandat£3.9billion.TheofferbecameunconditionalinJuly,liftingtheGroup’stotalassetsfrom£86billionin1991toover£170billionin1992.

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Right: An advertisement from 1959 announcing The Hongkong and Shanghai Banking Corporation’s acquisition of the Mercantile Bank and The British Bank of the Middle East. Bottom right: Staff outside HSBC’s branch in London’s Chinatown. Previously part of The Hongkong and Shanghai Banking Corporation, this office joined HSBC Bank’s UK network in 1999.

HSBC’sacquisitionofMidlandcreatedoneofthelargestfinancialorganisationsofitskindintheworld.AttentionnowturnedtointegratingandconsolidatingthebusinessoftheenlargedGroup.HSBCwasespeciallykeentoseeasynergyoftheinterestsofthemajorsubsidiarycompanies.TreasuryoperationsinLondon,NewYorkandTokyowereintegratedandcommonstandardsintechnologywereintroduced.Similarly,between1992and1994,HSBCdrewtogetheritsactivitiesinmerchantbanking,securitiesandassetmanagement,andthenenhanceditsprivatebankingandsecuritiescustodybusiness.Ineachoftheseareasofbusiness,theenlargedGroupbenefitedfromagreaterlevelofco-ordinationandacommitmenttoeffectivetechnologyandtraining.TheresultsoftheseeffortswerereflectedinHSBC’sperformance,withprofitsattributabletoshareholdersincreasingfrom£586millionin1991tomorethan£2,000millionin1994.

AnimportantresultoftheacquisitionofMidlandwasthetransferinJanuary1993oftheGroup’sheadoffice—butnotthatofTheHongkongandShanghaiBankingCorporationLimited—fromHongKongtoLondontomeettherequirementsoftheUKregulatoryauthorities.AlthoughtheBankofEnglandnowbecametheleadregulatorforHSBCHoldings,thebankingsubsidiariescontinuedtoberegulatedlocallyintheircountryofoperation.HSBC’straditionalconcernforrapid

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Left: The Pudong district of Shanghai, China, where the HSBC Tower (left) was opened in 2000. The Group has been continuously represented in Shanghai since 1854, when the Chartered Mercantile Bank opened for business in the city.Below: The banking counter of HSBC’s office in Bangkok, Thailand, in 1998.

decision-makingandlocalaccountabilitymeantthatthenewGroupHeadOfficeinLondonprovidedonlytheessentialcentralfunctions,suchasstrategicplanning,humanresourcemanagement,legalandcompanysecretarial,andfinancialplanningandcontrol.In1998,HSBCannouncedthattheseheadofficefunctions,togetherwithmostoftheGroup’sLondon-basedbusinessesandoperations,wouldberelocatedtoanewheadquartersbuildinginLondon’sDocklands.The45-storeytower,designedbyFosterandPartners,wasofficiallyopenedinApril2003.Thenewbuildingquicklybroughtadvantagesincommunications,logisticsandworkingconditionsforsome8,000HSBCstaff.

Inthelate1990sandearly2000s,HSBCvigorouslydevelopeditsroleasoneoftheworld’sleadersinbankingandfinancialservices.Itsstrategyof‘ManagingforValue’emphasisedtheGroup’suniquebalanceofbusinessandearningsbetweentheolder,matureeconomiesandthefaster-growingemergingmarkets.ThecreationofnewsubsidiariesinSouthAmericain1997,forinstance,extendedHSBC’sreachinemergingmarkets,asdidtheacquisitionofallofLloydsTSB’sassetsrelatingtoBrazilin2003.

Incontrast,theacquisitionin1999ofRepublicNewYorkCorporationandSafraRepublicHoldingsS.A.forUS$9.85billionreinforcedHSBC’spresenceinthehighlydevelopedmarketsoftheUnitedStates,SwitzerlandandLuxembourg.Thethird-largestdeposit-takingbankintheNewYorkmetropolitanareaandaleadingnameinprivatebanking,RepublicmatchedHSBC’saimofdeliveringwealthmanagementinkeyfinancialcentresaroundthe

world.AfurthermajorinvestmentfollowedwhenHSBCannouncedinApril2000aUS$11billionrecommendedofferforCréditCommercialdeFrance(CCF).Establishedin1894,CCFbroughtintotheGroupanetworkof650branchesinFranceandgreatlystrengthenedHSBC’spresenceintheeurozone.

InNovember1998,HSBCannouncedtheadoptionofaunifiedbrand,usingHSBCanditshexagonsymbolnearlyeverywhereitoperates,withtheaimofenhancingrecognitionoftheGroupanditsvaluesbycustomers,shareholdersandstaffthroughouttheworld.ThebrandinginitiativeallowedHSBCtodevelopnewservicesandproductsonaworldwidescale,allbearingtheGroup’sidentity.ForexampleHSBCPremier,launchedin2000,providesround-the-clockinternationalservicesfortheGroup’smostvaluablepersonalcustomers.

TheHSBCbrandhasalsoproveditsworthinaseriesofglobalmarketingprogrammesandsponsorship.Between2002and2011,theHSBCidentitycarriedthestrapline‘theworld’slocalbank’andin2012itwasnamedtheworld’smostvaluablebankingbrand.

AlthoughHSBC’sacquisitionsandgrowthsince1992hadbroughtgreatergeographicalbalance,itspositioninNorthAmericadidnotyetmatchitsprominenceinAsianandEuropeanmarkets.Asaplatformforgrowthinthatregion,in1999thesharesofHSBCHoldingsplcwerelistedontheNewYorkStockExchange.Acquisitionswerealsoessentialtoalargerroleintheregionandin2003thepurchaseofHouseholdInternational,IncaddedsubstantiallytoHSBC’sbusinessandprofile.However,by2007itwasbecomingobviousthatthetroubledstateoftheUShousingmarketwashavinganegativeimpactondebtrepayment,andthedecisionwastakentoscalebackbusiness.

TheinvestmentinNorthAmericawasmatchedsouthoftheborderbyaseriesofpurchases.In2002,HSBCacquiredandrecapitalisedGrupoFinancieroBitalinMexicoandin2006purchasedGrupoBanistmo.BasedinPanama,GrupoBanistmo,wastheleadingbankinggroupin

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Above: The offices of the Republic New York Corporation at 452 Fifth Avenue, with the Empire State Building in the background.Right: The Group’s hexagon symbol was introduced as part of the new corporate identity of The Hongkong and Shanghai Banking Corporation in 1983. The hexagon was developed from the bank’s traditional house flag: a white rectangle divided diagonally to produce a red hourglass shape. Like many other Hong Kong company flags that originated in the 19th century, the design was based on the cross of St Andrew.

CentralAmericaandgaveHSBCaccesstonewmarkets,withofficesinColombia,CostaRica,ElSalvador,HondurasandNicaragua.

Despiteitsadventuresoverseas,HSBCstillhasaclearfocusonitsplaceofbirth.In2005,HSBCcelebrated140yearsofbusinessinChinaandcontinuestogrowintheregion.InApril2007HSBCannouncedtheformationofalocallyincorporatedbank–HSBCBank(China)CompanyLimited–andinthesameyearreceivedpermissiontobecomethefirstinternationalbanktoestablishabankinruralChina.Bythebeginningof2010,thebranchnetworkincludedsome99outletsthroughoutthecountry.HSBChasalsobuiltupanetworkofstrategicpartnersintheregion,takingsignificantstakesinBankofShanghai(2001),PingAnInsuranceCompanyofChina(2002)andBankofCommunication(2004).In2009,tounderscoreHSBC’scommitmenttoitsemergingmarketbusinessandreflectingtheshiftintheglobaleconomy,HSBCannouncedthatitsGroupChiefExecutivewouldrelocatetoHongKongatthebeginningof2010.

HSBCreinforceditslong-standingcommitmenttotheenvironmentin2004whenitbecameafoundermemberoftheClimateGroupand,inthefollowingyear,achieveditstargetofbecomingthefirstmajorbanktobecomecarbonneutral.MajorprogrammesareinplacetoembedsustainablepracticesintotheeverydaybusinessoftheGroup,includingissuinglendingguidelinesforenvironmentallysensitivesectorssuchasforestryandchemicals.Thisworkgainedrecognitionin2007whenHSBCwonthefirstFinancial TimesSustainableBankingAward.

IntherecentextraordinaryandunprecedentedturbulenceineconomiesandmarketsaroundtheworldHSBChasdrawnonitslongexperiencetoenableittoweatherthestorm.ResilienceisakeypartofHSBC’scorporatecharacteranditscorevaluesoffinancialstrengthandstabilityhavestooditingoodsteadthroughthesechallengingtimes.Earlyin2009HSBCannouncedaRightsIssuetoraiseapproximately$US17.7billiontomaintainitssignaturefinancialstrength,andtoenhanceitsabilitytodealwithanuncertaineconomicenvironment.

TodayHSBCoccupiesaleadingpositionintheworldofbankingandfinancewithaninternationalnetworkthatspanssixcontinents.Itsdistinctivehistoryandexperienceenableittomeetthechallengesoftherapidlychangingbusinessenvironmentofthe21stcentury.HSBChastravelledalongwaysinceitsbeginningsin1865–fromasmalllocalbanktotheworld’sleadinginternationalbank.

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Above: One of a pair of bronze lions guarding the entrance to the HSBC Head Office in London. They are replicas of the lions that have been displayed outside the Hong Kong office since 1935. The Hong Kong lions are themselves replicas of the lions that were originally cast for the new Shanghai office in 1923.

Below: Unveiling a new chapter in the history of HSBC with the establishment of locally incorporated HSBC Bank (China) Company Limited in April 2007 in Shanghai.

CompanybydateofentryintotheHSBCGroup Birthplace Date Date(namein2009) oforigin ofentry(name at entry into the Group)

TheHongkongandShanghaiBankingCorporationLimited HongKong 1865 1865Hongkong and Shanghai Banking Company Limited

HSBCBankMiddleEastLimited London 1889 1959The British Bank of the Middle East

HangSengBankLimited HongKong 1933 1965Hang Seng Bank Limited

TheSaudiBritishBank Riyadh 1978 1978The Saudi British Bank

HSBCBankUSA Buffalo 1850 1980Marine Midland Bank, N.A.

HSBCBankCanada Vancouver 1981 1981Hongkong Bank of Canada

HSBCBankEgyptS.A.E. Cairo 1982 1982Hongkong Egyptian Bank S.A.E.

HSBCBankAustraliaLimited Sydney 1986 1986HongkongBank of Australia Limited

HSBCBankplc Birmingham 1836 1992Midland Bank plc

HSBCTrinkaus&BurkhardtAG Düsseldorf 1785 1992Trinkaus & Burkhardt KGaA

HSBCGuyerzellerBankAG Zurich 1894 1992Bank Guyerzeller AG

HSBCBankMalaysiaBerhad KualaLumpur 1994 1994Hongkong Bank Malaysia Berhad

HSBCBankBrasilS.A.-BancoMúltiplo Curitiba 1952 1997Banco Bamerindus do Brasil S.A.

HSBCBankArgentinaS.A. BuenosAires 1903 1997Banco Roberts S.A.

HSBCBankUSA NewYork 1966 1999Republic New York Corporation

HSBCRepublicBank(Suisse)SA Geneva 1988 1999Republic National Bank of New York (Suisse) SA

HSBCBankMaltap.l.c. Valletta 1882 1999Mid-Med Bank p.l.c.

HSBCFrance Paris 1894 2000Crédit Commercial de France S.A.

HSBCBankA.S. Istanbul 1953 2001Demirbank TAS

HSBCMéxico,S.A. MexicoCity 1941 2002Grupo Financiero Bital, S.A. de C.V.

TheBankofBermudaLimited Hamilton 1889 2004The Bank of Bermuda Limited

HSBCBank(Panama)S.A. PanamaCity 1984 2006Grupo Banistmo S.A.

HSBCChina(China)CompanyLimited Shanghai 2007 2007HSBC China (China) Company Limited

Principal members of the HSBC Group

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Further readingFrankHHKing(ed.),Eastern Banking: Essays in the History of The Hongkong and Shanghai Banking Corporation(London:AthlonePress,1983).

ARHolmesandEdwinGreen,Midland: 150 Years of Banking Business(London:Batsford,1986).

GeoffreyJones,The History of The British Bank of the Middle East,2volumes(Cambridge:CambridgeUniversityPress,1986-87).

FrankHHKing,The History of The Hongkong and Shanghai Banking Corporation,4volumes(Cambridge:CambridgeUniversityPress,1987-91).

GillianChambers,Hang Seng:the Evergrowing Bank (HongKong:HangSengBank,1991).

Jean-PierreDavietandMichelGermain,Crédit Commercial de France: Une Banque dans le Siècle (Paris:CréditCommercialdeFrance,1994).

StuartMuirhead,Crisis Banking in the East: the History of the Chartered Mercantile Bank of India, London and China, 1853-93(Aldershot:Scolar/Ashgate,1996).

EdwinGreenandSaraKinsey,The Paradise Bank: the Mercantile Bank of India, 1893-1984(Aldershot:Ashgate,1999).

Furtherinformationisavailablefrom:GroupArchivesHSBCHoldingsplc8CanadaSquareLondonE145HQUnitedKingdomWeb:www.hsbc.com/historyE-mail:history@hsbc.com

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Picture creditsInsidefrontcover,firstpictureandbackcover:©SteveSpeller2002Pages1(top),3:www.markharwoodstudio.co.uk

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Back cover: The reverse of some of the images displayed on the HSBC History Wall at Group Head Office in London.

Issued by HSBC Holdings plcGroup Archives8 Canada SquareLondon E14 5HQUnited KingdomTelephone: 44 020 7992 1560E-mail: history@hsbc.com