HSBC Holdings plc is a multinational banking and financial services holding company. It is the largest bank in Europe and the 7th largest bank in the world. HSBC (Hong Kong and Shanghai Banking Corporation) was incorporated in 1866. The company considers both the United Kingdom and Hong Kong as dual “home markets”.
HSBC operates approximately 3,900 offices in 67 countries on 6 continents to service 38 million customers. HSBC’s organization is divided into four business groups: Commercial banking; Global banks and Markets (investment banking); Retail Banking and Wealth Management; and Global Private Banking.
HSBC has primary listing on both Hong Kong Stock and London Stock Exchanges. It is part of the Hang Seng Index and the FTSE 100 Index. It is the second-largest company listed on the London Stock Exchange, after Royal Dutch Shell. It has secondary listings on the New York Stock Exchange, Euronext Paris, and the Bermuda Stock Exchange.
Origins, and until 2000
Sir Thomas Sutherland of Scotland founded The Hong Kong and Shanghai Bank in Hong Kong on March 3, 1865, and in Shanghai a month later.
HSBC Holdings plc was originally incorporated in the United Kingdom as “Vernat Trading Company Limited” on January 1, 1959. It transformed in March 1991 into the parent holding company to the Hong Kong and Shanghai Banking Corporation Limited in preparation for the impending transfer of sovereignty of Hong Kong to China.
HSBC Holdings’ acquisition of Midland Bank was completed in 1992 giving HSBC a substantial market presence in the United Kingdom. HSBC Holdings plc relocated its world headquarters from Hong Kong to London in 1993.
HSBC announced in May 2016, plans to shut down 24 of its 50 branches in India, reducing its locations in the country to fourteen cities.
HSBC world headquarters is located at 8 Canada Square in Canary Wharf, London.
HSBC operates in each of the world’s major financial markets. The Americas, Asia Pacific and Europe each represent one-third of its business.
HSBC is Hong Kong’s largest bank and prints a majority of Hong Kong’s local currency. The bank was, in 2014, the fourth-largest bank in the world by assets, the second largest in terms of revenues and the largest in terms of market value. It was also the most profitable bank in the world with $19.13 billion in net income in 2007.
In a June 2006 article, The Economist stated that HSBC has been rated the largest banking group in the world by Tier 1 capital since the end of 2005. The Banker magazine, in February 2008, named HSBC the world’s most valuable banking brand.
HSBC provides financial services to more than 2 million small and medium-sized businesses. The serves sole proprietorships, partnerships, clubs and associations, and corporations and publicly-traded companies.
Global Banking and Markets
HSBC’s investment banking arm is Global Banking and Markets. The division has offices in 60 countries worldwide, describing itself as “emerging markets-led and financing-focused”. It is led by Samir Assaf, who was promoted in December 2010.
Services offered are: corporate banking, investment banking, capital markets, trade services, payments and cash management, and leveraged acquisition finance.
It also provides: equities, credit and rates, foreign exchange, money markets and securities services, and asset management services.
HSBC was ordered by US regulators in both 2003 and 2010 to strengthen its anti-money laundering practices.
The United States OCC issued a Cease and Desist Order in October 2010. This action required HSBC to improve its Anti-Money Laundering (AML) program.
It was noted that HSBC fully cooperated with the Senate investigation.
A media outlet in India produced an expose, in June 2013, showing HSBC officers agreeing to launder “black money.” HSBC launched an internal investigation and placed these employees on leave.
HSBC reportedly set up offshore accounts in Jersey for suspected drug-dealers and other criminals. HM Revenue and Customs launched an investigation following leaks detailing £700 million held in HSBC accounts in Jersey.
Argentina’s main taxing authority issued search warrants and made raids starting in January 2013, and in mid-March 2013 accused HSBC of creating fake receipts and using dummy accounts to launder money and evade taxes.
2012 US Senate investigation
A July 2012 US Senate committee report stated that HSBC was in breach of money-laundering rules. It had allegedly facilitated the circumvention of US nuclear-weapons sanctions by Iran and North Korea.
The largest fine ever handed out under the Bank Secrecy Act was handed to HSBC in December 2012. The bank was penalized US$1.9 billion for violating four U.S. laws designed to protect the U.S. financial system. The violations include laundering $881 million in drugs money for international cartels, and an additional $660 million for banks in US sanctioned countries.
HSBC acknowledged responsibility as part of the agreement deferring its prosecution.
US Dept of Justice charges of currency manipulation
Charged were made against two executives from HSBC Bank by the US Department of Justice in July 2016 relating to currency scheme defrauding clients of $3.5 billion.
Mark Johnson and Stuart Scott are accused of manipulating the foreign exchange market. Johnson was convicted on nine counts of wire fraud and conspiracy to defraud.
Stuart Scott, HSBC’s European head of foreign exchange trading in London, is accused of the same crimes. A warrant has been issued for Scott’s arrest.
HSBC denies claims made by Greenpeace and Global Witness that cite in separate statements that the bank is negatively impacting forestland. The bank has a sustainability policy prohibiting it from financing projects that damage valuable forestland.
Greenpeace has alleged that HSBC provides funds to palm oil producers for new plantations who contribute to the deforestation in Indonesia
Global Witness produced a report titled “In the Future There Will Be No Forests Left”. The report accuses the bank of supporting seven large Malaysian timber conglomerates thought to be responsible for deforestation in the Malaysian state of Sarawak without the necessary FSC certifications.
The bank has declined to reveal any information citing client confidentiality. It also maintains that the accusations against their clients violating forestland and forest-products policy are inaccurate.