HSBC Holdings PLC

• Date founded: 1991
• Industry: Banking; financial services
• Corporate Headquarters: London, England
• Type: Public

Overview

HSBC Holdings PLC is a British international banking organization with a 2022 revenue of $51.7 billion. This made it the largest bank in Europe and one of the largest in the world. The company originated in 1865 as an Asian-based bank. In 1991, HSBC Holdings was formed and became the bank’s parent company. It operates as a PLC, or private limited company. This is a company designation used in the United Kingdom and some of its commonwealths. It is similar to the “incorporated” or “limited liability” designations used in other countries. PLCs can raise capital by selling public shares which spreads out investment risk and often allows the company to grow larger.

The company employed around 220,000 people in about 4,000 offices in over sixty countries and territories in the 2020s, serving around 40 million customers worldwide. It has three business groups, each with a specific focus, including commercial banking, global banking and markets, and wealth and personal banking. HSBC Holdings has primary listings on both the London and Hong Kong stock exchanges as well as secondary listings on Euronext Europe, the New York Stock Exchange, and the Bermuda Stock Exchange.

History

HSBC Holdings originated as the Hong Kong and Shanghai Banking Company Ltd., from which it takes the initials used in its name. In 1865, when the bank was founded, Hong Kong was part of the British Empire, and had a growing export trade in silk, tea, and opium. Its merchants and business people had no local banks to serve their financial needs. They relied on a network of trading sites known as hongs and a few banks based in India or England.

Hong Kong’s merchants expressed growing concern that the area’s banking needs were not being met and might be taken over by large European-based financial organizations. Scottish banker and politician Thomas Sutherland was the local superintendent of the Peninsula and Orient Navigation Company. He suggested raising five million in Hong Kong dollars to start a new form of bank within Hong Kong itself. The capital was raised and the Hong Kong and Shanghai Banking Company opened on March 3, 1865, just days before representatives from other companies attempted to open their own bank in the area.

Within a year, the bank had three offices, including one in London. The bank’s success and merchant support encouraged even those who were initially reluctant to conduct business with the Hong Kong and Shanghai Bank. The broad support allowed the bank to survive a financial crisis in the first year of its existence and even absorb competitors. After a successful challenge to British colonial law that required it to be registered as a British-held entity, the company was renamed the Hong Kong and Shanghai Banking Corporation in 1866.

The company suffered a brief setback in 1870 when some ill-advised investments caused its operating capital to drop significantly. However, the company soon rebounded. In just two decades, the bank had offices in the United States, France, and Germany. In most cases, it was the first foreign-based bank to open in the cities where it established offices.

The bank grew in importance when it became the official government bank of Hong Kong and gained a significant share of the official business for Japan and China. These connections served the bank well throughout Asia. This created some issues for the bank during World War II (1939–1945) when Japan and Japanese-occupied China were on opposite sides of the conflict from the British. For a time, the Japanese occupied Hong Kong, forcing the bank to issue special currency and enforcing other orders that jeopardized its security. After the war, the bank returned to the same status it enjoyed before the conflict. In addition, the need to fund rebuilding and revitalization projects further advanced Hong Kong and Shanghai Bank’s place in the banking world.

In the years after the war, the bank began expanding to other international markets. It adopted a strategy of creating subsidiaries to manage various aspects of its business, a move driven in part by requirements of American banking laws. The bank made numerous acquisitions in the 1950s and 1960s that helped it expand into other countries. Its leadership followed by diversifying the company’s internal operations as well. These moves helped position the bank to be able to help stabilize the financial market in Hong Kong in 1964.

During the 1970s and 1980s, Hong Kong and Shanghai Bank continued international expansion and became a force in the global market. This put it in a good position when, in 1984, the British and Chinese governments signed an agreement to turn governance of Hong Kong over to China by 1997. In preparation for changes and potential instability predicted during the transition to Chinese rule, the bank formed HSBC Holdings PLC. This provided an ongoing connection between the British and Hong Kong arms of the company that helped keep it stable and strong during the transition. In 1998, HSBC Holdings took out a 999-year lease for a flagship location in London, further cementing the connections.

In the twenty-first century, HSBC expanded operations into China, opening a Shanghai headquarters in 2010, and began operating the joint venture securities HSBC Qianhai Securities Limited in 2017. The company opened a new headquarters in Singapore in 2020 and Malaysia in 2021. In 2024, HSBC's American headquarters moved to the Spiral in New York City.

HSBC launched several mobile applications for its global customers in the twenty-first century, including the HSBC US Mobile Banking app for American customers, HSBCnet Mobile for customers in over fifty countries, and HSBC Expat. Additionally, its international payment platform Zing is available for anyone, not only HSBC customers. In partnership with Visa, Zing allows users to hold an account balance in ten different currencies and conduct transactions using thirty currencies in around two hundred countries.

Impact

HSBC Holdings PLC, as a holding company for the HSBC Group, became a well-known and respected player in the international finance market. It leverages technology to connect far-flung offices around the world, allowing it to have a true international presence. Its overall assets are spread across the globe, with about 30 percent in Hong Kong and a slightly larger amount of 35 percent in the United Kingdom. The remainder of its assets are allocated at about 19 percent in the Americas, about 12.5 percent in other parts of Asia, and about 3.5 percent in the rest of Europe. In the 2020s, HSBC remained the top bank in Hong Kong and was the ninth-largest bank by assets in the world. It is also involved in the green banking sector, which focuses on sustainable infrastructure and other environmentally conscious projects, especially those located in non-industrialized parts of the world.

Bibliography

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Chan, James. “Sir Thomas Sutherland – First Chairman of Hong Kong & Whampoa Dockyard.” Industrial History of the Hong Kong Group, 20 Mar. 2021, industrialhistoryhk.org/sirthomas-sutherland-chairman-hong-kong-whampoa-dockyard. Accessed 23 Dec. 2024.

“HSBC Holdings.” Forbes, 2022, www.forbes.com/companies/hsbc-holdings. Accessed 23 Dec. 2024.

“HSBC Holdings plc Annual Report and Accounts 2022.” HSBC, 21 Feb. 2023, www.hsbc.com/-/files/hsbc/investors/hsbc-results/2022/annual/pdfs/hsbc-holdings-plc/230221-annual-report-and-accounts-2022.pdf. Accessed 23 Dec. 2024.

“HSBC Holdings PLC History.” Funding Universe, www.fundinguniverse.com/company-histories/hsbc-holdings-plc-history. Accessed 23 Dec. 2024.

"HSBC Partnered with Visa to Develop Zing International Money App." Visa, 9 July 2024, investor.visa.com/news/news-details/2024/HSBC-Partnered-with-Visa-to-Develop-Zing-International-Money-App/default.aspx. Accessed 23 Dec. 2024.

“What Public Limited Company (PLC) Means in the U.K.” Investopedia, 24 Sept. 2024, www.investopedia.com/terms/p/plc.asp. Accessed 23 Dec. 2024.