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The HSBC GroupA brief history

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Contents

Foreword 1

Introduction 2

The HSBC Group in the Asia-Pacific region 4

The HSBC Group in Europe 14

The HSBC Group in the Middle East 22

The HSBC Group in the Americas 26

The making of the modern HSBC Group 32

Principal members of the HSBC Group 36

Further reading 37

Cover: A detail of some of the images displayed on the HSBC History Wall at the Group Head Office in London.A major work of art designed and built by Thomas Heatherwick Studio, the History Wall comprises nearly 4,000images relating to HSBC’s history around the world.Below, left: The HSBC History Wall seen from the main entrance of the Group 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.

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The HSBC Group has a remarkable history inbanking and financial services. That history hasleft its mark and helped to make us what we aretoday — one of the leading organisations in themodern financial world.

HSBC’s pride in its history is not a matter ofnostalgia. Our experiences have shaped theGroup’s character and business approach. Ourrecord of resilience, adaptability and innovationhelps to explain why we have been able to succeedduring times of rapid change. Likewise, our historyexplains why we believe in capital strength, strictcost control and in building long-termrelationships with our customers. These factors arevital to our progress in meeting the challenges ofthe financial world of today and tomorrow.

Our business is based on confidence and trust. Ourreputation for integrity — built amongstcustomers, shareholders and the wider communityover generations — is paramount. Striving toobserve the letter and the spirit of laws andregulations wherever we operate around the worldis a deeply ingrained part of the HSBC character.We believe that the way a company behaves will bethe defining competitive advantage of this century.

This brief history of the HSBC Group introducesthe major events, decisions and personalities thathave made us what we are today. I hope that youwill enjoy it and find it illuminating and useful.

Sir John BondGroup ChairmanDecember 2003

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 ofthe 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 Group Head Office at 8 Canada Square, London.

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IntroductionHeadquartered in London, HSBC Holdings plc isone of the largest banking and financial servicesorganisations in the world. HSBC’s internationalnetwork comprises over 9,500 offices in 79countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.

Through an international network linked byadvanced technology, including a rapidly growinge-commerce capability, HSBC provides acomprehensive range of financial services:personal financial services; consumer finance;commercial banking; corporate, investmentbanking and markets; and private banking. At 30 June 2003, the Group’s total assets amounted to US$983 billion (£595 billion, HK$7,663 billion).It has 218,000 employees and nearly 200,000shareholders around the world.

Although the Group’s holding company, HSBCHoldings plc, was formed as recently as 1991,many of its principal constituent companiesopened for business over a century ago and havelong experience in their home and internationalmarkets. The story of the growth and developmentof these companies is rich in variety andachievement, with an international pedigree that isunique in banking history.

This brief history describes the origins andevolution of the companies that make up theHSBC Group. The history concludes with asummary of the far-reaching changes in recentyears that have given HSBC its special place intoday’s major financial markets.

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Right: HSBC’s GroupHead Office at 8 Canada Square,London.Below: Map showingthe offices of theHSBC Group in 1965.


The HSBC Group in the Asia-Pacific regionBeginnings, 1865The HSBC Group’s name is derived from TheHongkong and Shanghai Banking CorporationLimited, the founding member of the modernGroup. The bank owed its origins to the businesscommunities of the China coast in the 1860s. Atthat time, the finance of trade in the region wasnot well developed and most transactions were stillhandled by the European trading houses, or hongs,rather than by professional banks. By the early1860s, local businessmen needed larger and moresophisticated facilities. In Hong Kong, inparticular, business leaders required specialistbanking services — preferably from a bank thatwas locally owned and managed.

The founding of the bank in 1865 answered thisneed. The new company was the inspiration ofThomas Sutherland, then the Hong KongSuperintendent of the Peninsular and Oriental

Steam Navigation Company, who produced aprospectus for a locally based bank operating onsound ‘Scottish banking principles’. Theprospectus attracted the support of a broadspectrum of Hong Kong interests, includingAmerican and Indian trading houses as well asEuropean firms, and the initial capital of HK$5million was quickly taken up in Hong Kong,Shanghai and Calcutta. On this basis, the bankopened for business in Hong Kong on 3 March1865. Then, as now, the bank’s headquarters wereat 1 Queen’s Road. One month later, on 3 April1865, the bank’s Shanghai office opened forbusiness. Initial response from customers in thetwo cities was favourable, both from the foreignbusiness community and from the compradores,the influential Chinese intermediaries in charge oflocal staff and business dealings in the Chinesecommunity.

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Detail from apainting showing aview of the waterfrontat Victoria West,Hong Kong, in about1860, shortly beforethe founding of TheHongkong andShanghai BankingCorporation in 1865.


The new bank’s commitment to local ownershipand management required a special arrangementfor incorporation. Rather than operate underexisting British or colonial regulations — whichwould have required a London head office — thebank’s directors persuaded the Treasury in Londonto accept incorporation under a special HongKong ordinance. This allowed the bank tomaintain a head office in Hong Kong withoutlosing the privilege of issuing banknotes andholding government funds. In this way, the bank(which had started life under a local CompaniesOrdinance as the Hongkong and ShanghaiBanking Company Limited) assumed the nameThe Hongkong and Shanghai BankingCorporation in December 1866. Thereafter, thebank’s statutory framework remained basicallyunchanged until 1989, when registration under theHong Kong Companies Ordinance was completed.

Early business and developmentSoon after its formation in Hong Kong andShanghai, the bank established a network ofagents and branches around the world. Althoughthat network reached as far as Europe and NorthAmerica, the emphasis was placed on building uprepresentation in China and the rest of the Asia-Pacific region.

In many of its branches and agencies in Asia, TheHongkong and Shanghai Banking Corporationwas the pioneer of modern banking practices.From the outset, trade finance was a strong featureof its local and international business, an expertisethat has been recognised throughout its history.Bullion and exchange businesses were also

important in the early years. In Japan, where abranch was opened at Yokohama in 1866, the bankacted as an adviser to the government on bankingand currency. In 1888, it was the first bank to beestablished in Thailand, where it printed thecountry’s first banknotes. By 1900, the branchnetwork in Asia extended to India (1867), thePhilippines (1875) and Singapore (1877), and tocities in what are now Malaysia, Myanmar, SriLanka and Vietnam.

In the 19th century, international banking of thiskind required innovation and high levels of risk.The bank had its share of setbacks in its earlyyears, including over-commitment to a number oflocal industrial ventures. From the mid-1870s,however, the bank renewed its focus on tradefinance. Thomas Jackson, Chief Manager on threeoccasions between 1876 and 1902, dominated thisperiod of the bank’s growth and led it to becomethe foremost financial institution in Asia. Inachieving this reputation, Jackson and hissuccessors were supported by a distinctive cadre ofmanagers and staff. These officers, many of whomhad begun their careers with English or Scottishjoint-stock banks, were trained in London beforetaking up appointments in Asia. On reaching thehigher levels of management, the bank’s officerscould call on varied experience in the manydifferent settings of the bank’s operations.

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Left: Sir ThomasJackson (1841-1915),a key figure in theearly history of TheHongkong andShanghai BankingCorporation.

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 governmentsThe Hongkong and Shanghai BankingCorporation’s international reputation in the late19th and early 20th centuries owed much to itsachievements in government finance. By the 1880s, it was acting as banker to the Hong Konggovernment and as sole or joint banker for Britishgovernment accounts in China, Japan, Penang andSingapore. The issue of banknotes was also animportant contribution to business services in allof the bank’s areas of operation.

The outstanding example of the bank’s role ingovernment finance was its management of newloans for China. The bank handled China’s firstpublic loan — the 8 per cent Foochow loan of1874 — and thereafter issued most of China’spublic loans. These issues included loans forrailway construction and other infrastructureprojects and, by 1910, the bank was the primemover in the China Consortium, a multinationalagency for loans to China.

Business in the early 20th centuryAfter the shock and disruption that the FirstWorld War brought to international trade, TheHongkong and Shanghai Banking Corporation

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looked forward to expansion in its Asian markets.The new head office at 1 Queen’s Road (1935) andthe new buildings at major branches such asBangkok (1921), Manila (1922) and Shanghai(1923) reflected this confidence. In contrast, thepolitical outlook in China grew increasinglyuncertain and, in South-East Asia, the bank facedheavier competition from Dutch and Frenchbanks. Throughout the 1930s, in keeping with itslong-standing connections with governmentfinance in China, the bank took a leading part inefforts to stabilise the Chinese national currency.

In the Second World War, the majority of thebank’s European staff became prisoners of war asthe Japanese advanced through Asia. Those inManchuria, Japan and Indo-China wererepatriated, but most of those who failed to escapewere interned. The Chief Manager, Sir VandeleurGrayburn, and his designated successor,D C Edmondston, died while prisoners in HongKong. Meanwhile, in 1941, British regulatorsrequired that Arthur Morse, as Chairman of thebank’s London Advisory Committee, should act as Chairman of the bank. Two years later,the London Committee was empowered to act as a Board of Directors and Morse was appointedto the dual role of Chairman and Chief Manager.

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Far left: A bound volumeof circulars sent to thebranches by the headoffice of The Hongkongand Shanghai BankingCorporation in 1885.This page refers to staffpassages and reductionsarranged by the bankwith P.&O. The bank’sfounder, ThomasSutherland, waschairman of P.&O. atthis time.Left: A postcard view of the Queen’s Roadentrance to the headoffice building of TheHongkong and ShanghaiBanking Corporationin 1915.Below: View of the Bundin Shanghai in the late1870s. The Hongkong andShanghai BankingCorporation had movedfrom Nanking Road topremises on the Bund(second building fromleft) in 1873.


Post-war recoveryAfter the Second World War, in June 1946, thebank was able to restore its head office powers andfunctions to Hong Kong. In the immediate post-war period, the bank quickly took on a key role inthe reconstruction of the Hong Kong economy. Itssupport for the skills and experience of newcomersto Hong Kong was especially vital to the upsurgein manufacturing in this period. As a result, thebank’s total assets tripled to HK$3.6 billionbetween 1940 and 1954.

In its other markets, however, the bank needed tomake major readjustments. After the civil war inChina, most of the mainland branches were closedbetween 1949 and 1955, leaving only the Shanghaioffice to continue its long and eventful servicesince 1865.

New alliances in Asian bankingThe changes of the post-war period — theconcentration on Hong Kong and the closure ofthe branches in mainland China — carried the riskthat the bank was growing too narrow in its sphereof interests. Under Michael Turner’s leadershipbetween 1953 and 1962, the bank avoided the riskby diversifying its business in a series ofacquisitions and alliances. These additions, whichincluded the formation of The Hongkong andShanghai Banking Corporation of California (seepage 26) and the purchase of The British Bank ofthe Middle East (page 22), were to be the bank’sfirst experience of working as a ‘group’ ofcompanies.

In the Asia-Pacific region, key additions were theMercantile Bank in 1959, a controlling interest inHang Seng Bank Limited in 1965, and theformation of Wardley Limited in 1972. TheMercantile Bank, originally established as theMercantile Bank of Bombay as early as 1853, hadits own distinguished history in Asian banking.When its acquisition by The Hongkong andShanghai Banking Corporation was completed in1959, the Mercantile Bank was operating 35branches, with an especially strong presence in theIndian sub-continent and Malaysia. TheMercantile’s head office was transferred to HongKong in 1966, and its business was then graduallyintegrated into the larger Group.

Hang Seng Bank, in contrast, was a local HongKong bank established in 1933. The Hongkongand Shanghai Banking Corporation obtained acontrolling interest in 1965, shortly after banks inHong Kong had faced a brief period of crisis.

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Right: The logo ofHang Seng Bank,introduced in 1954.Below: The staff ofthe Calcutta branch ofthe Mercantile Bank in 1938. The branchhad opened for businessin 1855.


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Hang Seng, under its own name and management,has since emerged with great success as the secondlargest bank incorporated in the Hong KongSpecial Administrative Region.

Not all these alliances were in commercialbanking. In 1972, a new wholly owned company,named Wardley Limited after the bank’s originalheadquarters in Wardley House, was created toserve as a merchant banking subsidiary. Wardleylater developed its own series of subsidiaries infinancial centres throughout Asia. In 1981, it alsoacquired a controlling interest in EquatorHoldings Limited, whose subsidiaries offermerchant and investment banking, trade and

advisory services in Africa. In 1995, as part of theGroup’s strategy of adopting a unified identity forits investment banking and capital marketsactivities (see page 33), the principal Wardleybusinesses were renamed and brought together asHSBC Investment Bank Asia Limited.

The Hongkong and Shanghai BankingCorporation continued to seek new opportunitiesfor diversification in the emerging markets of theAsia-Pacific region. The globalisation of theeconomy in the 1980s and 1990s opened upfinancial markets that had previously been closedto foreign banks. In 1985, the bank obtained abanking licence in Australia and then established

Left: Label from the first current accountledger used at the London office of TheHongkong and Shanghai BankingCorporation in 1865.Below: A HK$25 note issued by TheHongkong and Shanghai BankingCorporation in Yokohama, Japan, in 1866.


HongkongBank of Australia Limited in thefollowing year (now HSBC Bank AustraliaLimited). The bank took full ownership of thissubsidiary in 1987 and also acquired a bankinglicence in New Zealand. In 1994, it was the firstforeign bank to incorporate locally in Malaysia,forming Hongkong Bank Malaysia Berhad (nowHSBC Bank Malaysia Berhad).

New directions in Asia-Pacific The Group has extended its services on themainland since the late 1970s, following theintroduction of China’s ‘open door’ economicpolicy and in support of the country’s growing

international trade. In 1980, The Hongkong andShanghai Banking Corporation opened arepresentative office in Beijing. More officesfollowed in China’s other major cities and, in 1984,it became the first foreign bank since 1949 to begranted a banking licence, allowing the Shenzhenoffice to be upgraded to a full branch. In 1997 (theyear in which the People’s Republic of Chinaresumed sovereignty over Hong Kong), HSBC wasone of the first international banks to be givenpermission to conduct renminbi business inmainland China. By 2002, the Group had thelargest office network of any international bank inChina. This network has been supplemented by a series of strategic partnerships. In 2001, an 8 per cent share in the Bank of Shanghai waspurchased and, in the following year, HSBCacquired a 10 per cent share in Ping An InsuranceCompany of China, the second largest lifeinsurance operator in the country.

There has been major business growth in India.2001 saw the opening of the only branch in theHSBC network that is open 365 days a year inPune, western India, and, in the same year, HSBCwas able to enter the insurance market in India forthe first time. The Group has also pioneered theuse of global resourcing centres to achieve acompetitive advantage. Situated in Bangalore and

Opposite: Members ofstaff photographedoutside the Kobe officeof The Hongkong andShanghai BankingCorporation in Japanin 1902.Above: View ofRaffles Place,Singapore, in about1919. The offices ofthe Mercantile Bankare situated in thecentre, at the far end ofthe square.Left: The skyline ofSydney, featuring thetop of HSBC BankAustralia’s head officein George Street.HSBC Bank Australiawas established as asubsidiary in 1986.


Hyderabad in India, in Guangzhou and Shanghaiin China, and in Cyberjaya in Malaysia, thesecentres have allowed HSBC to utilise its worldwidereach and to improve services by conducting backoffice functions on an international basis.

In addition to investing in the emerging markets ofChina and India, the Group has also strengthenedits businesses in other parts of the Asia-Pacificregion. In Australia, the purchase of the NRMABuilding Society in 2001 enhanced the personalfinancial services business of the bank. This wascomplemented a year later by the transfer of thecorporate and trade finance business of the StateStreet Bank and Trust Company to HSBC BankAustralia.

The Hongkong and Shanghai Banking Corporationalso maintained its commitment to its birthplaceas a key strategic aim. The most visibledemonstration of this was the bank’s substantialinvestment in its striking head office building inthe Hong Kong SAR, designed by Sir NormanFoster and officially opened in 1986. The bank wasoperating almost 200 branches in the Hong KongSAR by the end of 2002, supported by anextensive network of ATMs, self-service bankingcentres and internet banking services. Three-quarters of the territory’s adult population nowhold personal accounts with the bank. Representedby the largest bank in the Hong Kong SAR andwith a major presence on the mainland, HSBCmaintains its position as one of the foremostfinancial institutions in the dynamic markets of theAsia-Pacific region.

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Right: Night view of the modernheadquarters ofThe Hongkong andShanghai BankingCorporation in theHong Kong SAR.Far right: Perspectiveview by WilliamWalcot of the 1935head office of TheHongkong andShanghai BankingCorporation, designedby G L Wilson ofPalmer and Turner.


The HSBC Group has maintained a presence inEurope since the opening of the London office ofThe Hongkong and Shanghai BankingCorporation in July 1865. However, through theacquisition of other banks and companies, theGroup’s history in this region can be traced backto the late 18th century. It was the acquisition ofMidland Bank plc (now HSBC Bank plc) in 1992which transformed HSBC’s representation inEurope, placing it among the leading financialinstitutions in the world. The Group’s position wasconsolidated still further with the acquisition ofCrédit Commercial de France S.A. (now CCFS.A.) in France in 2000.

Origins of Midland Bank, 1836Midland Bank, which opened for business inUnion Street, Birmingham, in August 1836, wasthe inspiration of its first manager, Charles Geach.Having left a secure appointment at the Bank ofEngland to take up the challenge of commercialbanking, Geach had the business support andcapital backing of leading merchants andmanufacturers in Birmingham. The town and itsregion were the homeland of the IndustrialRevolution and the new bank began business in athriving but highly competitive local economy.

In the 1830s and 1840s, Midland occupied animportant niche in Birmingham business,particularly in the discounting of bills of exchangefor its customers. Links with local industrial andcommercial concerns were especially strong and,by the 1850s, the bank’s customers includedrailways, iron founders and engineering concerns,utilities and municipal corporations. Midlandestablished its first branches by acquiringStourbridge Old Bank in 1851 and Nichols, Bakerand Crane of Bewdley in 1862. Both firms hadbeen pioneers of banking in the West Midlands:the origins of the Stourbridge bank can be traced back to 1762 and the Bewdley bank dated from 1777.

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Right: Charles Geach,founder and firstmanager of MidlandBank in 1836.Below: Extract fromthe deed of settlementestablishing MidlandBank in August 1836.

The HSBC Group in Europe


Acquisitions and developmentIn its first 50 years, Midland steadily enlarged itsbusiness in Birmingham and the surroundingregion. From the 1880s, it expanded its customerbase by opening new branches and by acquiringother banks. Its most important initiative was thedecision to move into the wider national market.This was achieved in 1891 by the acquisition of theCentral Bank of London (which gave Midland aseat in the London Clearing House) and, in 1898,by taking over the City Bank (which provided aLondon head office). By 1918, with deposits of£335 million, it ranked as the largest bank in theworld. The key figure in this remarkable advancewas Edward Holden, Managing Director from1898 to 1908 and Chairman and ManagingDirector from 1908 until his death in 1919. Heoversaw more than 20 bank amalgamationsbetween 1891 and 1918, and opened new branches throughout England and Wales.

Holden also encouraged the development ofMidland’s international business; it was the firstBritish bank to set up a foreign exchangedepartment and, by 1919, it was acting as Londonbank to some 650 correspondent banksthroughout the world. From 1907, thesecorrespondents included The Hongkong andShanghai Banking Corporation.

After the First World War, the leading Britishbanks entered an agreement with the governmentthat they would not attempt furtheramalgamations without Treasury approval. As aresult, Midland turned its attention to expandingits branch network, adding new banking services,mechanising its systems (from 1928) andadvertising its activities.

Above: The bankinghall and counter of thePall Mall branch of theLondon Joint StockBank in the 1850s,from a watercolour by E H Martineau. Thisbank became part ofMidland in 1918.Left: Bust of SirEdward Holden, wholed Midland Bank tobecome the biggestbank in the world by 1918.


Post-war recovery and international alliancesThe ending of credit restrictions in 1958 broughtrenewed competition into British banking.Midland responded by extending its branchnetwork and by introducing a series of innovativeservices, including personal loans (1958), personalcheque accounts (1958) and cheque cards (1966).

At the same time, the bank diversified its interestsaway from traditional commercial banking.Forward Trust, which was acquired in 1958,emerged as a leader in instalment finance, leasing

and factoring services. Midland’s purchase in 1967of a share in Montagu Trust, the owner of SamuelMontagu & Co. Limited, was the first associationbetween a British clearing bank and a Londonmerchant bank. Samuel Montagu, with its owndistinguished history dating back to 1853, becamea wholly owned subsidiary in 1974 and is now partof HSBC’s private banking business. Furtherdiversification followed in 1972, when Midlandwas the leading member of the consortium thatacquired the Thomas Cook travel business. Afterbecoming sole owner in 1977, Midland sold itsinterest in 1992, but the link is maintained byoffering Thomas Cook services through the bank’sbranch network.

Until 1974, Midland’s overseas business reliedupon its traditional links with correspondentbanks and, in the 1960s, membership of a numberof consortia of European and international banks.From 1974, the emphasis switched, first to openingbranches or representative offices in the majorfinancial centres of the world and, second, toacquiring international subsidiaries. Of theseinitiatives, the purchase of a majority share inCrocker National of California, USA, in 1981proved to be a serious setback to Midland’sfortunes. After a series of heavy losses by theCalifornian bank, Midland took full ownership in1985 and then sold Crocker to Wells Fargo thefollowing year.

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Right: Illustration ofBewdley, Worcestershirein about 1890. Thebusiness of MidlandBank’s branch (centre)can be traced back tothe foundation ofNichols, Baker andCrane in 1777.Below: The coat ofarms blazon granted toMidland in 1952. Thebank’s motto is visunita fortior —strength united is yetstronger.


Midland Bank enjoyed greater success withinvestment in Germany, where the focus of activitywas Trinkaus & Burkhardt KGaA, a private bankwith a long history of its own. In 1785, ChristianGottfried Jaeger founded a trading company inDüsseldorf, which eventually passed to his nephew,Christian Gottfried Trinkaus. Trinkaus developedthe firm into a bank and gave it his own name. In1972, C G Trinkaus merged with the bankinghouse Burkhardt & Co, which had been founded inEssen in 1841, and operations were extended toLuxembourg and Switzerland. Midland Bankacquired a controlling interest in 1980 and, today,as HSBC Trinkaus & Burkhardt KGaA, thecompany enjoys a leading position in bothcommercial and investment banking. Through theacquisition of Samuel Montagu & Co, Midlandhad also gained a majority share in GuyerzellerBank AG (now HSBC Guyerzeller Bank AG) inSwitzerland.

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Left: The interior ofMidland Bank’s branchin Kendal in the 1890s.The wood panelling,stained glass andcounter lamps were alltypical features ofbranch premises duringthe 19th century and thefirst half of the 20thcentury.Below: The first generalledger of ChristianGottfried Jaeger’strading house,established inDüsseldorf in 1785. Thefirm was the forerunnerof HSBC Trinkaus &Burkhardt KGaA, theGroup’s principalsubsidiary in Germany.


Midland joins the HSBC GroupThe Hongkong and Shanghai BankingCorporation acquired a 14.9 per cent equityinterest in Midland Bank in 1987, and a strongworking relationship developed. The mostimportant innovation during this period was thelaunch of First Direct in 1989. First Directpioneered the revolutionary concept of telephonebanking, with a person-to-person service available24 hours a day, 365 days a year. It now offersinternet banking as well and serves more than onemillion customers. First Direct is today the mostrecommended bank in the United Kingdom.

In 1992, HSBC Holdings plc acquired fullownership of Midland Bank. It was one of thelargest acquisitions in banking history, givingHSBC the major foothold in Europe that it neededto complement its existing business in Asia and theAmericas. Midland was renamed HSBC Bank in1999 as part of the adoption of the HSBC brandthroughout the Group.

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Right: Front cover ofa marketing leafletissued by First Direct,which had pioneeredtelephone bankingin 1989.Below: Night view ofCCF’s headquarters inParis. The building wasilluminated during1994 as part of thebank’s centenarycelebrations.


Origins of CCF, 1894Ernest Méjà and Benjamin Rossier foundedBanque Suisse et Française at 27, rue Laffite, Paris,on 1 July 1894. They had previously workedtogether for Banque Fédérale S.A. and their newfirm began by taking over the business of theSwiss bank’s Paris branch. Méjà remained as jointmanaging director of the bank with Rossier untilhis death in 1910. Rossier then continued to runthe bank until his retirement in 1936. Both men’svaluable contributions to the French economywere recognised when they were made chevaliers ofthe Légion d’honneur.

From its early days, Banque Suisse et Françaisetook an active interest in commerce and industry.A successful working relationship was developedwith the Paris department store Galeries Lafayette.The bank also helped fund the construction of thenew Métropolitain underground system and theinstallation of public lighting in the capital. Theearly success of the business led to considerableexpansion. The number of employees rose tenfoldby the turn of the century, and the bank moved tolarger headquarters at 20, rue La Fayette. From1912, the bank began to develop a branchnetwork, with 14 offices opening in Paris and afirst provincial office in Lille. An office was alsoacquired in Marseilles when the business ofBanque du Colombier was taken over in 1914.

The creation and development of CCFIn January 1917, the bank’s shareholders approveda proposed merger with the Lyons-based MaisonAynard et Fils and Caisse de Crédit de Nice.Maison Aynard et Fils had started out as adrapers’ company in the early 18th century, beforeturning to banking in 1858. Established in 1865,Caisse de Crédit de Nice had opened a number ofbranches along the Mediterranean coast and inItaly. The resulting business adopted the nameCrédit Commercial de France (CCF). Two yearslater, the business of the Banque de Bordeaux wasalso acquired.

In 1922, the bank’s central management and mainservices were transferred to 103, avenue desChamps-Elysées. Still the headquarters of thebank today, these former hotel premises offered aprestigious location from which CCF consolidatedits standing on the French banking scene. Thecompany continued to expand through theacquisition of other banks and, by the end ofthe decade, it had become the sixth largest bank in France.

In the 1960s, during the chairmanship of JacquesMerlin, CCF embarked upon a policy ofconsiderable expansion, with the number ofbranches rising to more than 200. The bank’sindustrial affairs department and internationaldepartment were also founded during this period.In 1979, the long-running advertising campaign,‘The Bank of success’, was launched, whichboosted the number of shareholders from 17,000to 34,000. Three years later, the bank wasnationalised by the French government but thisdecision was later reversed and CCF was privatisedonce again in 1987.

CCF joins the HSBC GroupCCF was operating with 650 branches and assetsof €69 billion by the end of the 20th century. InApril 2000, HSBC Holdings plc announced itsintention to acquire the bank and the deal wascompleted in July. That month, HSBC Holdingsplc was listed on the Paris Stock Exchange for thefirst time. The acquisition has enabled HSBC toestablish a strong position in one of the mainEuropean markets, and to build a strong platformin the euro zone. CCF has continued to expandwith the purchase of Banque Pelletier (2000) andBanque Hervet (2001).

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Below and overleaf:CCF postersadvertising liberationand reconstructionloans, which wereissued in Francefollowing the end of theFirst World War.


Other European connectionsHSBC can claim long experience of Europeanmarkets in addition to the connections developedby Midland and CCF. The London office of TheHongkong and Shanghai Banking Corporationwas opened within a few months of the bank’sfounding in 1865, and it continued to play a keyrole in business and management development.The bank was the first foreign bank to openbranches in Lyons (1881) and Hamburg (1889).Both the Mercantile Bank and The British Bank ofthe Middle East also maintained London offices.

In other facets of its European business, TheHongkong and Shanghai Banking Corporationsought growth through the acquisition of existingbusinesses. In 1973, for example, the bankobtained a share in Antony Gibbs, the old-established London merchant bank, and took fullownership in 1980. The bulk of this business waslater subsumed into the Group, but the insuranceconnection continues as HSBC Insurance BrokersLimited, one of the largest brokers in the Lloyd’sof London market.

In 1971, The British Bank of the Middle Eastacquired a 20 per cent stake in The CyprusPopular Bank Limited. This company had beenfounded in 1901 as the Popular Savings Bank ofLimassol. HSBC has since increased its holding to22 per cent and, in 1996, the marketing name wasaltered to Laiki Group.

In the 1980s, the deregulation of the LondonStock Exchange — ‘Big Bang’ — gave banks theopportunity to enter new financial markets. In thecase of The Hongkong and Shanghai BankingCorporation, this was achieved by the acquisitionof James Capel & Co. Limited in 1986. Establishedin the 1770s, Capel provided access to capitalmarkets and securities activities. This business wassubsequently integrated into HSBC’s investmentbanking business.

In June 1999, HSBC acquired a majorityshareholding in Malta’s Mid-Med Bank p.l.c. (nowHSBC Bank Malta p.l.c.), the largest commercialbank on the island. Two years later, HSBC Bankplc acquired Demirbank TAS, the fifth largestprivate bank in Turkey. This business has sincebeen merged into HSBC Bank A.S., which hadfirst entered the Turkish market in 1990. Thesedevelopments have contributed to HSBC’s strategyof building a strong, diversified representationthroughout Europe.

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Far left: Headquartersof Laiki Group inNicosia, Cyprus.Left: Headquarters ofHSBC Bank Maltap.l.c. in Valletta.Below: Advertisementby HSBC Bank A.S. inTurkey, using theGroup theme of theimportance of localknowledge. Theadvertisement alsoshows money throughthe ages and featuresthe bank's popularAdvantage card.


When the Group acquired The British Bank of theMiddle East in 1959, it gained entry to one of themost diverse and rapidly changing financialmarkets in the world. Its new subsidiary wasamong the largest and most experienced bankingcompanies in the Middle East.

Origins, 1889The British Bank of the Middle East, now calledHSBC Bank Middle East Limited, was establishedin London in September 1889. Originally knownas the Imperial Bank of Persia, the new companybegan life as banker to the imperial government of Persia. Earlier in 1889, Baron Julius de Reuter,a founder of the bank (and also the creator ofReuters), had obtained a 60-year bankingconcession from the Shah of Persia, which allowedthe new bank to issue notes as well as to act as thestate bank of Persia. Unusually for an overseasbank at that time, the Imperial Bank was alsogranted a Royal Charter by the Britishgovernment.

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Right: The official sealof the Imperial Bankof Persia. The lion andsun emblem alsofeatured on the notesissued by the bank.Below: Postcard ofTehran in 1938,showing the chief officeof the Imperial Bankof Iran (formerly theImperial Bank ofPersia).

The HSBC Group in the Middle East


The Imperial Bank of Persia first opened forbusiness in Tehran in late 1889. A year later, ittook over the Persian business of the New OrientalBanking Corporation and, between 1890 and 1893,it opened seven branches elsewhere in the country.Initially, the bank was handicapped by theinternational weakness of silver — Persia’smonetary standard — but, from 1896 until the First World War, the bank played an increasinglyimportant role as the state bank and in theexchange markets. Commercial bank deposits grewsteadily and, by the 1920s, the bank had opened 26 branches.

Diversification in the Middle EastIn the 1930s and 1940s, political change in Persiatransformed the outlook for the Imperial Bank. In1930, for example, the issue of banknotes wastransferred to Bank Melli Iran, which had recentlybeen established as the Persian national bank.When the country changed its name to Iran, theImperial Bank was renamed the Imperial Bank ofIran in 1935. Then, in 1949, foreign banks wererequired to transfer 55 per cent of their deposits tothe Iranian state bank. Two years later, the bank’sforeign exchange permit was withdrawn, leavinglittle option but to close the chief office in Tehran.

These momentous changes required the bank toremodel its strategy and reorganise itsrepresentation. The process was already under wayin the early 1940s, when the Imperial Bankpioneered banking in the Gulf states. In thisregion, banking was to play a vital role in thedevelopment of the oil industry in the MiddleEast. Branches were opened in Kuwait (1942),Bahrain (1944), Dubai (1946) and Muscat (1948).Similarly, branches were opened in the cities of the‘fertile crescent’ — Beirut (1946), Damascus (1947)and Amman (1949). This diversificationthroughout the Middle East was reflected in thechange of name in 1949 to The British Bank ofIran and the Middle East. Following thewithdrawal from Iran, in 1952 the bank obtained anew Royal Charter under the shorter name of TheBritish Bank of the Middle East.

Regional expansion and Group alliancesThe strategy of regional expansion wassuccessfully maintained in the 1950s. By 1959,when the bank was acquired by the Group, it hadadded offices in Saudi Arabia, Aden, Libya,Sharjah, Qatar, Tunisia, Morocco and Abu Dhabi.From 1959, the bank was again represented in Iranbut this return ended when the country’s bankswere nationalised in 1979.

23

Above: Portrait ofBaron Julius de Reuter.He founded theImperial Bank ofPersia in 1889, havingobtained a 60-yearbanking concessionfrom the Shah ofPersia.Left: The coat of armsof The British Bank ofthe Middle East,granted in 1957.


Nationalisation of the bankingindustry was a continuing factor inthe Middle East from the 1960s and,as a result, the bank ended itspresence in Syria, Iraq, Aden andLibya. Elsewhere, and especially inthe oil-rich economies of the Gulf,the bank reinforced its branchnetwork or entered local bankingalliances. In 1978, for instance, thebank’s business in Saudi Arabia wastransferred to a new bank, TheSaudi British Bank, in which theGroup took a 40 per centshareholding. The Group alsoinvested in the Hongkong EgyptianBank S.A.E., which was establishedin 1982 and in which the Grouptook a 40 per cent share.

24

Above: A 1,000 tomannote printed by theImperial Bank ofPersia in about 1890.Right: An extract froma staff register of theImperial Bank ofPersia, noting officers’movements betweenbranches in the 1920s.


In 1994, the head office of The British Bank of theMiddle East was transferred to Jersey and, in 1999,the bank was renamed HSBC Bank Middle East.The investment in the Egyptian subsidiary was increased to 90 per cent in 2001, and the bank was renamed HSBC Bank Egypt S.A.E. The BritishArab Commercial Bank Limited (formerly UBAFBank Limited) is another of HSBC’s associatedcompanies, in which Midland Bank became ashareholder in 1972.

HSBC has pioneered services and products in theregion, building on its international capability andglobal reach. An innovative range of products,available through HSBC Amanah Finance, allowsthe Group to provide viable Islamic alternatives toconventional finance. With this range of interests,the Group is one of the leading banking andfinancial services organisations in the Middle East.

Above: Staff at the Tehran office of the Imperial Bank ofPersia in about 1920.Right: Members of staff at work in the offices of TheSaudi British Bank, an associated company of the HSBCGroup, established in Riyadh in 1978.

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HSBC’s interests in the Americas encompass boththe mature market of North America and theemerging markets of South and Central America.In 1980, the Group purchased a 51 per centinterest in Marine Midland Banks, Inc, a leadingregional bank with its headquarters in Buffalo,New York. This marked a major commitment tobanking and financial services in North America,

leading to full ownership of Marine Midland in1987. HSBC has built purposefully on thesefoundations, notably in its acquisition of RepublicNew York Corporation in 1999 and HouseholdInternational, Inc. in 2003. Since the 1990s, theGroup has also expanded its operations in theAmericas through a series of purchases in SouthAmerica and in Mexico.

Early links with North AmericaThe Hongkong and Shanghai BankingCorporation already had lengthy experience in theNorth American markets. An agency was openedin San Francisco in 1865, the year of the bank’sestablishment. That office became a full branch in1875 and, five years later, a branch was opened inNew York City. It was not until the 1950s,however, that the bank considered operating itsown subsidiary in the United States. The businesspotential of California was especially strong and,in 1955, a wholly owned subsidiary, TheHongkong and Shanghai Banking Corporation ofCalifornia, was incorporated locally. By the 1970s,it had become clear that this subsidiary had onlylimited room for growth and the bank decided thata stake in a large existing American financialinstitution — Marine Midland Banks, Inc —offered more scope for expansion. The business ofthe Californian subsidiary was then wound down.

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Above: The formerbranch of TheHongkong andShanghai BankingCorporation in SanFrancisco, where thebank has beenrepresented since 1865.Right: J P WadeGard’ner, New Yorkagent of TheHongkong andShanghai BankingCorporation, at hisdesk in 1917. The bank had maintained a New York agencysince 1880.

The HSBC Group in the Americas


Origins, 1850Marine Midland’s history dates back to 1850,when the Marine Trust Company opened forbusiness in Buffalo, New York. The bank wasformed to finance the trade in grain between theMid-West, the Great Lakes and the easternseaboard. Over the next half century, New YorkState was transformed from an agrarian to amanufacturing economy. A network of railwayswas built, criss-crossing the state and bringing withit new business opportunities. An iron industrygrew up, centred on Troy, and the harnessing ofwater power in Niagara led to the creation ofelectro-chemical and electro-metallurgicalindustries. Local banks sprang up to provide thefinancial services needed by these burgeoningindustries, although state legislation preventedthem from expanding throughout the state.By 1918, the board of Marine Midland, thenknown as Marine National Bank, was increasinglyfrustrated by these legislative restrictions and sovoted to convert Marine into a state charteredtrust company. This new state charter allowedMarine to merge with several Buffalo banks duringthe 1920s, becoming the first bank in the area toset up branches within the city limits.

Incorporation and banking affiliationsUnder the leadership of the Rand family in theearly 20th century, Marine became a statewidebusiness and the largest banking operation withinthe state outside New York City. Furtherexpansion became possible when, in October 1929,Marine was incorporated and listed on the NewYork Stock Exchange as Marine MidlandCorporation (later known as Marine MidlandBanks, Inc). The addition of Midland to the title

reflected the company’s geographical extensioninto the ‘midlands’ of New York State by groupingtogether a number of banks within the state.

From 1929, Marine pioneered its role as a multi-bank holding company and, in all, almost 80 localbanks became part of Marine MidlandCorporation. Due to state law, these affiliatedbanks continued to operate as separate entities,each with their own capital, personnel and boardof directors, but they operated with a commonpurpose through the central leadership of theCorporation. The oldest financial institution tojoin the group was the First Bank and TrustCompany, founded in Utica in 1812.

Marine Midland’s commercial and retail bankingservices continued to expand after the SecondWorld War. Further acquisitions were made andwere later grouped into 10 affiliate banks in NewYork State. These, in turn, were brought togetherto create a single subsidiary when the New YorkState legislature ended its century-old restrictionon branch banking in 1976. The unified bank,named Marine Midland Bank, with total assets ofUS$10.5 billion, was one of the largest bankingamalgamations of its kind in the United States.

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A US$1 banknoteissued by theMarine Bank inBuffalo in 1850.


Marine Midland joins the HSBC GroupAfter becoming a wholly owned subsidiary in1987, Marine Midland Banks, Inc (renamed HSBCAmericas Inc. in 1995) concentrated onreorganising its operations to focus on corebusinesses. The bank’s personal and commercialbusinesses have been enhanced by a string ofacquisitions that have increased its market share.In 1996, the bank acquired the business of theEast River Savings Bank. In 1997, the purchase ofthe Federal Savings and Loans Association ofRochester was completed and, in 1999, thebranches of the First Commercial Bank ofPhiladelphia were added to the network. Theseacquisitions were complemented by theconsolidation of the Group’s activities in theregion. The New York City branches of bothHang Seng Bank and The Hongkong andShanghai Banking Corporation were transferred toMarine Midland Bank in 1995-96, as were thecorporate banking unit of Midland Bank andConcord, the equipment leasing company.

Nationally, Marine Midland directed its effortstowards becoming a major competitor in selectedfinancial services, including credit card provision,mortgage servicing, student lending andcommercial finance. The bank’s membership of theHSBC Group gave it an advantage over otherregional banks, with its access to internationalmarkets, products and technology, which enhancedMarine’s capabilities to serve its corporate

customers (especially in trade finance). Technologyalso boosted such services as drive-throughbanking and PC banking. In 1999, as part of theGroup’s worldwide adoption of the HSBC brand,Marine Midland Bank was renamed HSBC BankUSA, and the holding company HSBC AmericasInc. was renamed HSBC USA Inc.

Republic New York CorporationLater in 1999, HSBC’s representation in New Yorkwas substantially enhanced by the acquisition ofRepublic New York Corporation. Thecorporation’s founder company, the RepublicNational Bank of New York, was the inspirationof Edmond J Safra and, when the bank opened forbusiness in 1966, its initial capitalisation of US$11million was a record for a private commercial bankat that time. In the last quarter of the 20th century,Republic greatly expanded its activities in NewYork. In 1975, it merged with Kings-LafayetteBank and then acquired Williamsburgh SavingsBank in 1987 and the Manhattan Savings Bank in1990. When the company became part of HSBC,the united operations of Republic National Bankof New York and HSBC Bank USA created thethird largest depository institution in New YorkState and tenth largest bank in the United Statesbased on assets.

The acquisition of HouseholdThe acquisition in March 2003 of the consumerfinance company, Household International, Inc.,significantly increased HSBC’s business in NorthAmerica. The transaction added national coveragein the United States for consumer lending,mortgage financing, credit cards and creditinsurance, and marked the most significant changein the shape of HSBC in more than a decade.

Household International was first established in1878, making it the oldest consumer financecompany in the United States. It began life in aMinneapolis jewellery store when the bank’s

28

Right: Senator RobertF Kennedy cuts theribbon at the grandopening ceremony ofthe Republic NationalBank of New York in1966. The companybecame part of HSBCin 1999.Opposite: A 1940sposter celebrating theservice of staff whohad been withHousehold for 25 yearsor more. The companywas founded whenFrank J Mackey(centre) began makingpersonal cash loans inMinneapolis in 1878.Below: An artist’simpression of the newoffices of the MarineTrust Company ofWestern New York inBuffalo in about 1960.The business wasaffiliated to the MarineMidland Corporation.


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founder, Frank J Mackey, offered the firstunsecured personal loans to people of averagemeans. In 1883, the first branch office was openedat St Paul, Minnesota.

The bank’s early years were marked by stronggrowth and innovation. In 1894, a network of 14branches had been established throughout theMid-West and, to centralise operations, the bankmoved its headquarters from Minneapolis toChicago, Illinois. The young company was apioneer in its field, introducing in 1898 the firstmonthly payment plan for customers to repay theiroutstanding loans. Following incorporation asHousehold Finance Corporation in the 1920s, thebank became the first consumer finance companyto offer stock to the public and be listed on theNew York Stock Exchange.

The third quarter of the 20th century sawHousehold diversify into merchandising,transportation and manufacturing, as well as thecontinued growth of its core business. The creationof Household Retail Services in the 1970s allowedthe bank to expand into revolving credit to financepurchases. In 1973, selected retail banking servicesand loans were extended to the United Kingdomthrough the formation of HFC Bank.

In 1981, Household International, Inc. wasincorporated as a holding company for the bank’sdiverse and international operations. Soon after,this strategic move was followed by extension intothe card market as Household Credit Services,

later to become one of the largest Visa andMasterCard credit cards servers. In the late 1980s,Household returned its focus to its core strength inthe consumer financial services by disposing of itsmerchandising, transportation and manufacturingbusinesses. Household’s strong position inconsumer finance was consolidated in February1998 through the acquisition of BeneficialCorporation. This purchase, for a total of US$8.7billion, created one of the largest consumer financeand credit card businesses in the United States.

HSBC in CanadaThe Hongkong and Shanghai BankingCorporation first gained a direct presence inCanada in 1981, when Hongkong Bank ofCanada was established as a wholly ownedsubsidiary. The choice of Vancouver as the headoffice of the bank was in line with HSBC’s specialinterest in the economies of the Pacific rim. Thenew subsidiary has grown both organically andthrough acquisition: purchases include Bank ofBritish Columbia (1986), Lloyds Bank Canada(1990), ANZ Bank of Canada (1993), BarclaysBank of Canada (1996), and National WestminsterBank of Canada (1998). Within the Group, thebusiness of Midland Bank Canada was transferredto Hongkong Bank of Canada in 1988, BBNJames Capel Inc. was acquired in 1995, and theMarine Midland branches in Seattle and Portlandjoined the Canadian bank’s network in 1996. By1999, when it was renamed HSBC Bank Canada,the bank was operating a network of 116 branches.HSBC’s acquisition of Household has given theGroup an even older link with Canada. In 1928,the country’s first chartered small loan firm, theCentral Finance Corporation, was established.The firm was acquired by Household FinanceCorporation in 1933 and was renamed HFCCanada. A second Canadian division of Household,HFC Retail Services, was established in 1978.

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Right: Front cover ofa publication issued bythe research departmentof Household in 1932.Below: Alfonso OttizMena and Don LuisMontes de Oca,founders of Bital, atthe bank’s annualfestival in Mexico Cityin 1946.


HSBC in MexicoWhen, in November 2002, HSBC acquired GrupoFinanciero Bital, S.A. de C.V. of Mexico, it addeda major financial services group to its presence inNorth America. GFBital’s founding member,Banco Internacional, S.A., had been established asa commercial banking operation in Mexico Cityon 20 August 1941. In December 1980, BancoInternacional merged with 11 other long-established banks in Mexico. The oldest bank inthis amalgamation, Banco de Coahuila, had begunlife in 1933.

The united bank, under the name of BancoInternacional and later Grupo Financiero Bital,developed nationwide banking, bonding andbrokerage operations. It joined HSBC with anetwork of nearly 1,400 branches and six millioncustomers, the largest personal customer base inMexico.

HSBC in South AmericaThrough its holdings in Marine Midland andMidland Bank, HSBC acquired offices in Centraland South America that had been established inthe 1960s and 1970s. From the 1990s, HSBC addedto this representation with an ambitiousprogramme of expansion in support of growingintra-regional and international trade flows.

In 1987, Midland Bank had taken a shareholdingin Banco Roberts S.A. in Argentina. This interestpassed to the Group and was increased to fullownership in August 1997, when the name waschanged to HSBC Banco Roberts S.A. (nowHSBC Bank Argentina S.A.). Banco Roberts had

begun life in Buenos Aires in 1903, and expandedits interests throughout the 20th century. In 1918,it acquired a corporate insurance organisation, theImperial, renaming it La Buenos Aires CompañíaArgentina de Seguros S.A. Other subsidiariesincluded Máxima S.A., launched in 1994, thesecond-largest private pension provider in thecountry, and Docthos S.A., founded in the late1970s to provide pre-paid health care.

HSBC’s presence in South America has beenreinforced by a number of other acquisitions,adding to its varied range of interests throughoutthe Americas. In Chile, the Group’s business wasrationalised through a shareholding in BancoO’Higgins. The bank was founded in 1956, butparts of the business can trace their origins backto 1888. In January 1997, Banco O’Higgins mergedwith Banco de Santiago. Named Banco Santiago,the new bank became the largest privately ownedcommercial bank in Chile.

HSBC’s largest presence in South America wasestablished in March 1997, when Banco HSBCBamerindus S.A. was set up to take over the assets,liabilities and subsidiaries of Banco Bamerindusdo Brasil S.A. This bank had been established in1952 as Banco Mercantil e Industrial do Paraná,with its head office in Curitiba and a branch inItararé. Rapid expansion and diversificationfollowed, with the bank having almost 1,300branches by the time of its acquisition, plussignificant insurance, leasing and securitiesbusinesses. The bank’s corporate and regionaloperations are now located in São Paulo, where ithas set up new business units dealing with vehiclefinance and property. The bank’s name waschanged to HSBC Bank Brasil S.A.-BancoMúltiplo in 1999.

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Left: The head officeof Bital in MexicoCity in the 1960s.Below: PalácioAvenida, theheadquarters of HSBCBank Brasil S.A.-Banco Múltiplo inCuritiba. The business,which can be tracedback to 1952, becamepart of the HSBCGroup in 1997.


The making of the modern HSBC GroupWhen The Hongkong and Shanghai BankingCorporation acquired the Mercantile Bank andThe British Bank of the Middle East in 1959, itlaid the foundations of today’s HSBC Group. Inthese acquisitions and, by the later investment inHang Seng Bank in 1965, the bank grew anddiversified through subsidiary companies withtheir own experience and expertise.

In the late 1970s, this ‘group’ approach was a keyfactor in the strategy for expansion in marketswhere previously The Hongkong and ShanghaiBanking Corporation was not well represented,particularly in North America and Europe. In theUnited States, this expansion centred on thepurchase of a 51 per cent shareholding in MarineMidland Bank in 1980. This purchase, at a cost ofUS$314 million, nearly doubled the Group’s assets,from HK$128 billion to HK$243 billion. Theremaining shares were purchased in December1987, making Marine Midland the Group’sprincipal subsidiary in the United States.

In Europe, The Hongkong and Shanghai BankingCorporation sought a partnership similar to itsinvestment in Marine Midland. In 1981, its plansto acquire the Royal Bank of Scotland, counteringa bid from Standard Chartered Bank, werethwarted when the UK Monopolies and MergersCommission ruled against both bids. Six yearslater, however, the bank signalled its continuinginterest in the major British banks when itpurchased a 14.9 per cent interest in MidlandBank. A co-operation agreement between the bankand Midland allowed the two banks to consolidateand rationalise their international activities byreciprocal transfers of business as, for example, thetransfer of Midland Bank Canada to HongkongBank of Canada in 1988.

The formation of HSBC Holdings plc in 1991,creating a holding company for the entire Groupwith its shares quoted in London and Hong Kong,showed that the Group viewed Europe, and theLondon market in particular, as a vital part of itsfuture development. This strategy was made clearwhen, in March 1992, HSBC Holdings announcedthat it would make a recommended offer for fullownership of Midland. In late April Lloyds Bank,one of the other British clearing banks, indicatedthat it was also considering an offer for Midland.That possible offer was dropped shortly afterHSBC announced its final offer in June 1992,valuing Midland at £3.9 billion. The offer becameunconditional in July, lifting the Group’s totalassets from £86 billion in 1991 to over £170 billionin 1992.

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Right: Anadvertisement from1959 announcing TheHongkong andShanghai BankingCorporation’sacquisition of theMercantile Bank andThe British Bank ofthe Middle East.Bottom right: Staffoutside HSBC’s branchin London’sChinatown. Previouslypart of The Hongkongand Shanghai BankingCorporation, this officejoined HSBC Bank’sUK network in 1999.


HSBC’s acquisition of Midland created one of thelargest financial organisations of its kind in theworld. Attention now turned to integrating andconsolidating the business of the enlarged Group.HSBC was especially keen to see a synergy of theinterests of the major subsidiary companies.Treasury operations in London, New York andTokyo were integrated and common standards intechnology were introduced. Similarly, between1992 and 1994, HSBC drew together its activitiesin merchant banking, securities and assetmanagement, and then enhanced its privatebanking and securities custody business. In each ofthese areas of business, the enlarged Groupbenefited from a greater level of co-ordination anda commitment to effective technology and training.The results of these efforts were reflected inHSBC’s performance, with profits attributable toshareholders increasing from £586 million in 1991to more than £2,000 million in 1994.

An important result of the acquisition of Midlandwas the transfer in January 1993 of the Group’shead office — but not that of The Hongkong andShanghai Banking Corporation Limited — fromHong Kong to London to meet the requirementsof the UK regulatory authorities. Although theBank of England now became the lead regulatorfor HSBC Holdings, the banking subsidiariescontinued to be regulated locally in their countryof operation. HSBC’s traditional concern for rapid

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Left: The Pudongdistrict of Shanghai,China, where theHSBC Tower (left)was opened in 2000.The Group has beencontinuouslyrepresented inShanghai since 1854,when the CharteredMercantile Bankopened for business inthe city.Below: The bankingcounter of HSBC’soffice in Bangkok,Thailand, in 1998.


decision-making and local accountability meantthat the new Group Head Office in Londonprovided only the essential central functions, such asstrategic planning, human resource management,legal and company secretarial, and financialplanning and control. In 1998, HSBC announcedthat these head office functions, together with mostof the Group’s London-based businesses andoperations, would be relocated to a newheadquarters building in London’s Docklandsdistrict. The 45-storey tower, designed for HSBC byFoster and Partners, came into use in the autumn of2002, and was officially opened in April 2003. Thenew building quickly brought advantages incommunications, logistics and working conditionsfor some 8,000 HSBC staff.

In the late 1990s and early 2000s, HSBC vigorouslydeveloped its role as one of the world’s leaders inbanking and financial services. Its strategy of‘managing for value’ emphasised the Group’sunique balance of business and earnings betweenthe older, mature economies and the faster-growingemerging markets. The creation of new subsidiariesin South America in 1997, for instance, extendedHSBC’s reach in emerging markets, as did theannouncement of the acquisition of all of LloydsTSB’s onshore and offshore assets related to Brazilin 2003. The Group’s commitment to thesemarkets was also reflected in the increasingnumber of countries where HSBC was represented;this total has grown from 51 countries in 1991 to79 in 2003.

In contrast, the acquisition in 1999 of RepublicNew York Corporation and Safra RepublicHoldings S.A. for US$9.85 billion reinforcedHSBC’s presence in the highly developed marketsof the United States, Switzerland andLuxembourg. The third-largest deposit-takingbank in the New York metropolitan area and aleading name in private banking, Republicmatched HSBC’s aim of delivering wealthmanagement in key financial centres around theworld. A further major investment in matureeconomies followed when HSBC announced inApril 2000 a US$11 billion recommended offer forCrédit Commercial de France (CCF). Establishedin 1894, CCF brought into the Group a network of650 branches in France and long experience ofpersonal, corporate, investment and privatebanking, greatly strengthening HSBC’s presence inthe euro zone. These acquisitions and otherinitiatives contributed to a continuing improvementon HSBC’s performance, in which profitsattributable to shareholders grew from US$4,318million in 1998 to US$6,239 million in 2002.

HSBC has also sought wider access and recognitionin international markets. In November 1998, itannounced the adoption of a unified brand, usingHSBC and its hexagon symbol nearly everywhere itoperates, with the aim of enhancing recognition ofthe Group and its values by customers, shareholdersand staff throughout the world. The brandinginitiative allowed HSBC to develop new servicesand products on a worldwide scale, all bearing thesingle Group identity. Launched in 2000, HSBCPremier provides round-the-clock internationalservices for the Group’s most valuable personalcustomers. The HSBC brand also proved its worthin a series of global marketing programmes andsponsorships. Since 2002, the HSBC identity hascarried the strapline of ‘The world’s local bank’,emphasising the Group’s experience andunderstanding of a great variety of markets andcultures. The adoption of a single Group identityhas simplified the task of consolidating anddeveloping HSBC’s role in the community. Throughthe HSBC Education Trust and other initiatives, theGroup supports hundreds of educational projectsand thousands of children around the world.

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Above: The offices ofthe Republic New YorkCorporation at 452Fifth Avenue, with theEmpire State Buildingin the background.Right: The Group’shexagon symbol wasintroduced as part ofthe new corporateidentity of TheHongkong andShanghai BankingCorporation in 1983.The hexagon wasdeveloped from thebank’s traditionalhouse flag: a whiterectangle divideddiagonally to produce ared hourglass shape.Like many other HongKong company flagsthat originated in the19th century, thedesign was based onthe cross of St Andrew.


In 2001, HSBC also began its five-year ‘Investing inNature’ programme, a partnership in environmentalprojects with Earthwatch, WWF and BotanicGardens Conservation International.

Although HSBC’s acquisitions and growth since1992 had brought greater geographical balance toits representation in international finance, itsposition in North America did not yet match itsprominence in Asian and European markets. As aplatform for growth in that region, in 1999 shares inHSBC Holdings plc were listed on the New YorkStock Exchange, adding to its listings on theLondon, Hong Kong and (from 2000) Paris stockexchanges. In parallel, HSBC’s share structure wassimplified by introducing a single class of ordinaryshares denominated in US dollars.

Acquisitions were also essential to a larger role inNorth America. In 2002, HSBC acquired andrecapitalised Grupo Financiero Bital in Mexico at atotal cost of US$1.9 billion. This new member ofthe Group was scheduled to change its name toGrupo Financiero HSBC, S.A. de C.V. in early2004. In 2003, HSBC’s purchase of HouseholdInternational, Inc. added substantially to theGroup’s business and profile in the United States;Household’s network of over 1,300 branches in 45states provided consumer finance to 53 millioncustomers. In October of the same year, HSBCannounced its agreement to acquire the Bank ofBermuda in a transaction valued at US$1.4 billion.This bank, founded in 1889, is recognised as theleading institution in Bermuda’s local andinternational financial markets.

These important initiatives featured prominently inthe Group’s new strategic plan, ‘Managing forgrowth’, launched in the autumn of 2003. Buildingon HSBC’s unique international franchise, thestrategy seeks growth by a strong focus on the keycustomer groups of personal financial services;consumer finance; commercial banking; corporate,investment banking and markets; and private banking.

Today, with total assets of nearly US$1,000 billion,HSBC occupies a leading position in the world ofbanking and finance. Its international network nowspans six continents and serves almost 100 millioncustomers worldwide. The Group is international inscope, reflecting the long and colourful history ofits member companies in different markets aroundthe world. This distinctive history and experienceplaces HSBC in a strong position to meet thechallenges of the rapidly changing financial andeconomic environment of the 21st century.

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Above: Celebrations atthe New York StockExchange to mark thelisting of HSBCHoldings plc shares on16 July 1999.Left: One of a pair ofbronze lions guardingthe entrance to theHSBC Group HeadOffice in London. Theyare replicas of the lionsthat have beendisplayed outside theHong Kong office since1935. The Hong Konglions are themselvesreplicas of the lionsthat were originallycast for the newShanghai office in 1923.


Company by date of entry into the HSBC Group Birthplace Date Date(name in 2003) of origin of entry(name at entry into the Group)

The Hongkong and Shanghai Banking Corporation Limited Hong Kong 1865 1865Hongkong and Shanghai Banking Company Limited

HSBC Bank Middle East Limited London 1889 1959The British Bank of the Middle East

Hang Seng Bank Limited Hong Kong 1933 1965Hang Seng Bank Limited

Laiki Bank Limassol 1901 1971The Cyprus Popular Bank Limited

The Saudi British Bank Riyadh 1978 1978The Saudi British Bank

HSBC Bank USA Buffalo 1850 1980Marine Midland Bank, N.A.

HSBC Bank Canada Vancouver 1981 1981Hongkong Bank of Canada

HSBC Bank Egypt S.A.E. Cairo 1982 1982Hongkong Egyptian Bank S.A.E.

HSBC Bank Australia Limited Sydney 1986 1986HongkongBank of Australia Limited

HSBC Bank plc Birmingham 1836 1992Midland Bank plc

HSBC Trinkaus & Burkhardt KGaA Düsseldorf 1785 1992Trinkaus & Burkhardt KGaA

HSBC Guyerzeller Bank AG Zurich 1894 1992Bank Guyerzeller AG

HSBC Bank Malaysia Berhad Kuala Lumpur 1994 1994Hongkong Bank Malaysia Berhad

HSBC Bank Brasil S.A.-Banco Múltiplo Curitiba 1952 1997Banco Bamerindus do Brasil S.A.

HSBC Bank Argentina S.A. Buenos Aires 1903 1997Banco Roberts S.A.

HSBC Bank USA New York 1966 1999Republic New York Corporation

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

HSBC Bank Malta p.l.c. Valletta 1882 1999Mid-Med Bank p.l.c.

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

HSBC Bank A.S. Istanbul 1953 2001Demirbank TAS

Grupo Financiero Bital, S.A. de C.V. Mexico City 1941 2002Grupo Financiero Bital, S.A. de C.V.

Household International, Inc. Minneapolis 1878 2003Household International, Inc.

Principal members of the HSBC Group

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37

Further readingFrank H H King (ed.), Eastern Banking: Essays inthe History of The Hongkong and ShanghaiBanking Corporation (London: Athlone Press,1983).

A R Holmes and Edwin Green, Midland: 150Years of Banking Business (London: Batsford,1986).

Geoffrey Jones, The History of The British Bank ofthe Middle East, 2 volumes (Cambridge:Cambridge University Press, 1986-87).

Frank H H King, The History of The Hongkongand Shanghai Banking Corporation, 4 volumes(Cambridge: Cambridge University Press,1987-91).

Gillian Chambers, Hang Seng: the EvergrowingBank (Hong Kong: Hang Seng Bank, 1991).

Jean-Pierre Daviet and Michel Germain, CréditCommercial de France: Une Banque dans le Siècle(Paris: Crédit Commercial de France, 1994).

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

Edwin Green and Sara Kinsey, The Paradise Bank:the Mercantile Bank of India, 1893-1984(Aldershot: Ashgate, 1999).

Further information is available from:Group ArchivesHSBC Holdings plc 8 Canada Square London E14 5HQUnited KingdomWeb: www.hsbc.com/history

Picture creditsInside front cover, first picture and back cover:© Steve Speller 2002 Pages 1 (top), 3: www.markharwoodstudio.co.uk

© Copyright HSBC Holdings plc 2003All rights reserved

No part of this publication may be reproduced, storedin a retrieval system, or transmitted, in any form or byany means, electronic, mechanical, photocopying,recording, or otherwise, without the prior writtenpermission of HSBC Holdings plc.

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


Issued by HSBC Holdings plcGroup Corporate Affairs8 Canada SquareLondon E14 5HQUnited KingdomTelephone: 44 020 7991 8888Facsimile: 44 020 7992 4880Web: www.hsbc.comStock number 92761-7

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