QUOTE AND NEWS
Reuters  Jun 17  Comment 
HSBC Holdings Plc will pay $35 million to end private U.S. antitrust litigation claiming that it harmed investors by conspiring with other banks to manipulate the yen Libor and Euroyen Tibor benchmark interest rates.
Wall Street Journal  Jun 17  Comment 
HSBC’s deal to buy Household Finance unraveled in the U.S. housing bust, costing the bank billions.
Financial Times  Jun 17  Comment 
HSBC settlement is the latest example of a big win for investors
newratings.com  Jun 17  Comment 
FORM 8.5 (EPT/RI) PUBLIC DEALING DISCLOSURE BY AN EXEMPT PRINCIPAL TRADER WITH RECOGNISED INTERMEDIARY STATUS DEALING IN A CLIENT-SERVING CAPACITY Rule 8.5 of the Takeover Code (the "Code") 1.        ...
TheStreet.com  Jun 17  Comment 
It looked like good news but global banking giant HSBC    underperformed sector peers on Friday after its $1.6 billion legal  deal to settle a long-running class action lawsuit against its 2003 Household International purchase. The...
CNNMoney.com  Jun 17  Comment 
It may have taken 14 years, but the big payday has finally arrived for thousands of former shareholders of Household International.
Mondo Visione  Jun 17  Comment 
In a filing with The Bermuda Stock Exchange (“BSX”), HSBC Holdings plc (Ticker: HSBC.BH) announces HSBC Finance Corp reaches agreement to resolve 14- year shareholder class action. The full filing stated: HSBC Finance Corporation...
Clusterstock  Jun 16  Comment 
(Reuters) - A unit of HSBC Holdings Plc on Thursday said it will pay $1.575 billion to end a long-running securities fraud class action stemming from the acquisition of the Household International consumer finance business more than a decade...
newratings.com  Jun 16  Comment 
FORM 8.5 (EPT/RI) PUBLIC DEALING DISCLOSURE BY AN EXEMPT PRINCIPAL TRADER WITH RECOGNISED INTERMEDIARY STATUS DEALING IN A CLIENT-SERVING CAPACITY Rule 8.5 of the Takeover Code (the "Code") 1.        ...
Benzinga  Jun 16  Comment 
On CNBC's Mad Money, Jim Cramer said he sees HSBC Holdings plc (ADR) (NYSE: HSBC) dividend yield as a red flag. He added that investors who want a good dividend yield should buy AT&T Inc. (NYSE: T). Dow Chemical Co (NYSE: DOW) should be...




 
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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