QUOTE AND NEWS
Financial Times  11 hrs ago  Comment 
Scandals, levies and regulations give bank reasons to leave London for Hong Kong
guardian.co.uk  Apr 24  Comment 
Deputy chairman Sir Simon Robertson was forced to defend the chairman and chief executive after one in four votes against pay deals at the AGM Nearly one in four shareholders voted against HSBC’s pay and bonus deals at the bank’s annual...
Financial Times  11 hrs ago  Comment 
Yahoo  Apr 24  Comment 
HSBC Holdings (HSBA.L), JPMorgan (JPM.N) and Credit Agricole (CAGR.PA) will seek to fight European Union charges of rigging financial benchmarks at a closed door hearing in June, two people familiar with the matter said on Friday. The European...
guardian.co.uk  Apr 24  Comment 
Speaking at Chatham House in London on Friday, Ed Miliband says HSBC's announcement that it would consider moving its headquarters out of the UK is an example of the damage the Conservatives have done to the country's international reputation. The...
The Economic Times  Apr 24  Comment 
According to the global financial services major, a weak monsoon endangers both growth recovery and steady disinflation. But of the two, rural growth could hurt more.
Financial Times  Apr 24  Comment 
Unclear whether local regulator could cope with a bank 20 times as big as when it left for the UK
guardian.co.uk  Apr 24  Comment 
HSBC is to revisit the ‘complex’ issue of where to base its head office but any new state would have to be big enough to fund a bail-out in a crisis HSBC has been dancing around the domicile handbag for about a decade. It used to run a...
New York Times  Apr 24  Comment 
Britain has a tax that hits banks like HSBC and Standard Chartered particularly hard because it is calculated on their global balance sheets.
CNNMoney.com  Apr 24  Comment 
MarketWatch  Apr 24  Comment 
U.K. stocks rise, with HSBC higher as the banking heavyweight considers ditching the U.K. as the location of its headquarters.
Yahoo  Apr 23  Comment 
China's factory activity contracted at its fastest pace in a year in April, a private survey showed, suggesting that economic conditions are still deteriorating despite increasingly aggressive policy easing by the central bank. "Although momentum...




 
TOP CONTRIBUTORS

HSBC Holdings, PLC (Symbol: HBC) is a London-based banking and financial services organization that isn't indebted to the British government. [1] This sets the company apart from several U.K. competitors, like Barclays (BCS), Royal Bank of Scotland (RBS-LN), and Lloyds Banking Group (LYG), who have resorted to borrowing.[2] For the full year 2010 ended in December, HSBC reported a total interest income of $80B and a net profit of $14.2B.[3] While HSBC is headquartered in the UK, its operations where impacted by the financial crisis which started in the US. Because it is not an American company, it was not able to receive the same bailout opportunities as American banks and instead relied on British bailout money.

Business Overview

For the full year 2010 ended in December, HSBC reported a total interest income of $80B and a net profit of $14.2B.[3] HSBC Holdings operates in four main business segments. The financial crisis has distorted the net income break down of each segment. The Personal Financial Services, Commercial Banking, and Global Banking & Markets have traditionally earned equal portions of Net Income.[4]

Personal Financial Services (18% of 2010 Pretax profits)[4])

Personal Financial Services provides savings accounts, mortgages, personal loans, and credit cards. Within this segment is the HSBC Premier banking service, which offers 24-hour priority telephone access and free international funds transfer between HSBC accounts.[2]

Commercial Banking (31% of 2010 pretax profits[4])

The Commercial Banking segment offers banking products to corporate, mid-market, small, and micro businesses. These products include financing, cash management, international trade, and investment banking. [2]

Global Banking & Markets (50% of 2010 pretax profits [4])

The Global Banking & Markets segment offers financial products to major government, corporate, and institutional clients worldwide. These products include foreign exchange, currency and interest rate derivatives, and private equity managers.[2]

Global Private Banking (4% of 2010 pretax profits[4])

The Private Banking segment offers trustee services to high net worth individuals. These services include cash management, clearing, wealth management, and inheritance planning.[2]

Trends and Forces

Housing Market and Economic Conditions

HSBC owns large sets of mortgages which either it purchased or it originated. This makes it dependent on the housing market. An increased rate of foreclosure will cause the company to writeoff mortgages and attempt to sell them on the market. Selling houses becomes more difficult the more that the housing market declines. By contrast, the growth of the housing market allows HSBC's assets to become more reliable and likely to be paid.[5] [6]

HSBC issues rights to raise capital

HSBC [6] historically issued rights to allow existing shareholders to purchase additional securities at a discounted price.[1][7] This has allowed HSBC to avoid needing government capital, unlike its competitors Royal Bank of Scotland (RBS-LN) and Lloyds Banking Group (LYG), giving investors more confidence in HSBC. While issuing rights to prevent HSBC from raising capital, the company no longer has any rights to offer and so if it needs more capital, it will be forced to borrow from the government.

U.K. Banks are affected by changes in the US

As a U.K. based bank, HSBC is relatively insulated from U.S. crisises. However, U.K. banks have U.S. commercial real estate exposures -- in the form of loans and other debt mortgage-backed securities (MBS).[8] So hardships in the U.S. housing market and banks suffering losses due to subprime lending in turn causes foreign banks to suffer losses. However, because the UK tends to react after the US market has, this means that US banks are sometimes able to rise out of recessions sooner than UK based banks.

Competition


References

  1. 1.0 1.1 Investopedia, "Rights Offering"
  2. 2.0 2.1 2.2 2.3 2.4
  3. 3.0 3.1 HBC 2011 10-K "Report of the Directors: Operating and Financial Review" pg15-16
  4. 4.0 4.1 4.2 4.3 4.4 HBC 10-F 2011 Report of the Directors: Operating and Financial Review "Summary" p37
  5. Forbes, "HSBC Pays for its Mistakes," 03/02/09
  6. 6.0 6.1 Forbes, "AIG,HSBC Leave Europe Scarred," 03/02/09
  7. Bloomberg, "HSBC Finds Buyers for 97% of Record Rights Offering," 04/06/09
  8. Seeking Alpha, "Second Stress Wave for European Banks," 04/23/09
  9. Barclays 2008 Annual Report
  10. RBS Website, "Financial Results"
  11. LYG website, "About Us"
  12. Citigroup website, "About"
  13. Bank of America website, "About"
  14. J.P. Morgan website, "About Us"
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