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HSBC Bank Analysis Essay

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Hongkong and Shanghai Banking Corporation (HSBC) bank was formed in the year 1865 by Thomas Sutherland (Padmalatha 36). It was established after the United Kingdom invaded Hongkong and established a colony there.

The main objective of the bank was to facilitate trade between China and Europe. HSBC bank expanded gradually and became one of the largest financial institutions in the world. During the early years of the 20th century, the bank focused on issuing loans to governments, especially the Chinese government.

Thomas Bart, who was the bank’s manager during the early years of the 20th century, steered the bank to become the official bank for the Hong Kong government. Several branches were opened as the bank continued to expand to other regions.

It opened its new headquarters in Hong Kong in the year 1935. During the 1940’s, the bank’s expansion plan slowed down because Japanese troops turned the bank into a military headquarters when they seized Hong Kong (Padmalatha 36).

However, the bank resumed its expansion program after the war by acquiring Mercantile Bank and the British bank of the Middle East. From the 1940s, the bank acquired several holdings as part of their expansion strategy. It acquired Hang Seng Bank and formed Wardley Limited in the year 1972.

Wardley Limited acted as a bank that offered financial services to merchants. In 1980, HSBC attempted to acquire the Royal bank of Scotland. However, the acquisition was unsuccessful because the British government interceded and stopped the takeover (Padmalatha 36).

Despite the failed takeover, HSBC continued with its acquisition program and acquired a 51% stake in Marine Midland Bank in the United States.

In the 1990s, it acquired three establishments that included Republic National Bank, the Roberts SA de Inversiones, and the Banco Bamerindus. HSBC’s current CEO is known as Stuart Gulliver, who has been the CEO since 2011 (Padmalatha 36).

Emerging markets refer to countries or nations whose economies are in the industrialization stage and which are experiencing rapid growth. These nations include China, Japan, Brazil, and India. Emerging markets were projected as leaders of global recovery in 2010 because of several reasons.

These include low cost of labor, low costs of production, high domestic and foreign consumption of products, high rates of employment, and urbanization (Jensen par3). Low costs of labor and production boost and sustain economic growth. On the other hand, urbanization is an important factor in economic growth.

Urbanization is responsible for movement of people into urban areas, which leads to increase in income. Emerging economies produce goods and services that are under high demand both locally and internationally (Jensen par4). This results in high consumption of these products, thus boosting the economy.

In addition, emerging economies have distinct demographics. Emerging markets are characterized by a young population, rapid growth, and high consumer spending power (Jensen par6).

In addition, they have low debts that allow them to grow their economies. They respond swiftly to any economic stimulus because of their rapidly growing population and high GDP growth.

In 2012, HSBC Bank achieved several things. These include maintaining profitability and improving efficiency, cutting on costs, exiting some business ventures, and redeploying certain assets to markets that had rapid growth.

HSBC was able to exit some businesses that were not considered core in efforts to increase efficiency and profitability.

In addition, HSBC was involved in a money laundering case that forced them to pay $1.92 billion as settlement. This incidence tarnished their image significantly and affected their financial stability.

Works Cited

Jensen, Andrew. Emerging Markets will Drive Economic Recovery as U.S Struggles with its Debt. March 14. 2012. Web.

Padmalatha, Suresh. Management of Banking and Financial Services, 2/E. Delhi: Pearson Education India, 2011. Print.

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