PROJECT REPORT ON HONG KONG AND SHANGHAI BANKING CORPORATION (HSBC) IN PARTIAL FULFILLMENT OF THE DEGREE AWARDED AT B.COM (BANKING AND INSURANCE) SEMESTER V SUBMITTED TO UNIVERSITY OF MUMBAI FOR ACADEMIC YEAR 2014 – 2015 SUBMITTED BY: - NAME: - MANISH S. NALLELLA ROLL NO.: - 102 VIVA COLLEGE OF ARTS, COMMERCE AND SCIENCE VIRAR (WEST) 401303 1 ACKNOWLEDGEMENT I, MANISH S. NALLELLA the student of VIVA Collage pursuing my “B.COM (BANKING & INSURANCE)”, would like to pay the credits, for all those who helped in the making of this project. The first in accomplishment of this project is our Principal Dr. R.D. Bhagat, Vice Principal Prof. Prajakta Paranjape, Course Co-ordinator Prof. Roshni Nagar and Guide Prof. Audrin Colaco teaching & non teaching staff of VIVA College. I would also like to thank all my college friends those who influenced my project in order to achieve the desired result correctly. 2 3 DECLARATION I hereby declare that the project titled “ HONG KONG AND SHANGHAI BANKING CORPORATION (HSBC) ” is an original work prepared by me and is being submitted to University of Mumbai in partial fulfillment of “B.COM (BANKING & INSURANCE)” degree for the academic year 2014-2015. To the best of my knowledge this report has not been submitted earlier to the University of Mumbai or any other affiliated college for the fulfillment of “B.COM.(Banking & Insurance)” degree. Date: Name: Manish S. Nallella Place: Sign: 4 INDEX SR.N TOPIC PAGE O NO. 1 HISTORY 6-11 2 FINANCIAL INCLUSION 12-14 3 EMPLOYEE VOLUNTEERING 15-16 4 HSBC HOLDING PLC 17-18 5 PROJECTS – EDUCATION 19-22 6 PRODUCTS OF HSBC 23-29 7 OPERATIONS 30-35 8 GLOBAL PRODUTS LINE 36-37 9 CORPORATE SUSTAINABILITY 38-39 10 MONEY LAUNDERING 40-41 11 OTHER CONTROVERSIES 42 12 LOGO 43 13 SPONSORSHIPS 44-45 14 COMPANY OVERVIEW 46 15 KEY EXECUTIVES FOR HSBC 47 16 HSBC’S KEY DEVELOPMENTS 48-49 17 HSBC GROUP MEMBERS 50-51 18 CONCLUSION 52-53 19 BIBLIOGRAPHY 54 5 HISTORY Origins to 2000 The HSBC Main Building in 1901 in Hong Kong, the headquarters of the Hong Kong and Shanghai Banking Corporation from 1886 to 1933 for its Hong Kong operation. The HSBC Building in 2005 in Shanghai, the headquarters of the Hong Kong and Shanghai Banking Corporation from 1923 to 1955 for its Shanghai operation. For more information on the history of HSBC prior to the founding of HSBC Holdings in 1991, see The Hongkong and Shanghai Banking Corporation. The Hong Kong and Shanghai Banking Corporation was founded by Scotsman Sir Thomas Sutherland in the then British colony of Hong Kong on 3 March 1865, and in Shanghai one month later, benefiting from the start of trading into China, including opium trading. In 1980, HSBC acquired a 51% shareholding in US-based Marine Midland Bank, which it extended to full ownership in 1987. HSBC Holdings plc was established in the United Kingdom in 1991 as the parent company to the Hongkong and Shanghai Banking Corporation in preparation for its purchase of the UK-based Midland Bank and the impending transfer of sovereignty of Hong Kong to China. HSBC Holdings' acquisition of Midland Bank was completed in 1992 and gave HSBC a substantial market presence in the United Kingdom. As part of the takeover conditions for the acquisition, HSBC Holdings plc was required to relocate its world headquarters from Hong Kong to London in 1993. Major acquisitions in South America started with the purchase of the Banco Bamerindus of Brazil for $1bn in March 1997 and the acquisition of Roberts SA de Inversiones of Argentina for $600m in May 1997. In May 1999, HSBC expanded its presence in the United States with the purchase of Republic National Bank of New York for $10.3bn 6 2000 to 2010 The HSBC Main Building in Hong Kong, which was designed by Norman Foster and completed in 1985. Expansion into Continental Europe took place in April 2000 with the acquisition of Crédit Commercial de France, a large French bank for £6.6bn. In July 2001 HSBC bought Demirbank, an insolvent Turkish bank. In July 2002, Arthur Andersen announced that HSBC USA, Inc., through a new subsidiary, Wealth and Tax Advisory Services USA Inc. (WTAS), would purchase a portion of Andersen's tax practice. The new HSBC Private Client Services Group would serve the wealth and tax advisory needs of high net worth individuals. Then in August 2002 HSBC acquired Grupo Financiero Bital, SA de CV, Mexico's third largest retail bank for $1.1bn. In November 2002 HSBC expanded further in the United States. Under the chairmanship of Sir John Bond, it spent £9 billion (US$15.5 billion) to acquire Household Finance Corporation (HFC), a US credit card issuer and subprime lender. In a 2003 cover story, The Banker noted "when banking historians look back, they may conclude that [it] was the deal of the first decade of the 21st century". Under the new name of HSBC Finance, the division was the second largest subprime lender in the US. On 22 November 2001, the Hongkong and Shanghai Banking Corp would provide a fixed-rate mortgage to buyers of Cheung Kong (Holdings)' Victoria Towers residential development. The new headquarters of HSBC Holdings at 8 Canada Square, London officially opened in April 2003. In September 2003 HSBC bought Polski Kredyt Bank SA of Poland for $7.8m. In June 2004 HSBC expanded into China buying 19.9% of the Bank of Communications of Shanghai. In the United Kingdom HSBC acquired Marks & Spencer Retail Financial Services Holdings Ltd for £763m in December 2004. Acquisitions in 2005 included Metris Inc, a US credit card issuer for $1.6bn in August and 70.1% of Dar es Salaam Investment Bank of Iraq in October. In April 2006 HSBC bought the 90 branches in Argentina of Banca Nazionale del Lavoro for $155m. In 7 December 2007 HSBC acquired the Chinese Bank in Taiwan. In May 2008 HSBC acquired IL&FS Investment, an Indian retail broking firm. In 2005 Bloomberg Markets magazine accused HSBC of money-laundering for drug dealers and state sponsors of terrorism. Then-CEO Stephen Green said that "This was a singular and wholly irresponsible attack on the bank's international compliance procedures", but subsequent investigation indicated that it was accurate and proved that the bank was involved in money laundering throughout Mexico. U.S. Assistant Attorney General Lanny Breuer characterised HSBC compliance during this period as "stunning failures of oversight – and worse ... The record of dysfunction that prevailed at HSBC for many years was astonishing." In March 2009, HSBC announced that it would shut down the branch network of its HSBC Finance arm in the U.S., leading to nearly 6,000 job losses and leaving only the credit card business to continue operating. Chairman Stephen Green stated, "HSBC has a reputation for telling it as it is. With the benefit of hindsight, this is an acquisition we wish we had not undertaken." According to analyst Colin Morton, "the takeover was an absolute disaster". Although it was at the centre of the subprime storm, the wider group has weathered the financial crisis of 2007–2010 better than other global banks. According to Bloomberg, "HSBC is one of world's strongest banks by some measures". When HM Treasury required all UK banks to increase their capital in October 2007, the group transferred £750 million to London within hours, and announced that it had just lent £4 billion to other UK banks. In March 2009, it announced that it had made US$9.3bn of profit in 2008 and announced a £12.5bn (US$17.7bn; HK$138bn) rights issue to enable it to buy other banks that were struggling to survive. However, uncertainty over the rights' issue's implications for institutional investors caused volatility in the Hong Kong stock market: on 9 March 2009 HSBC's share price fell 24.14%, with 12 million shares sold in the last few seconds of trading. 8 2010 to 2013 8 Canada Square, the world headquarters of HSBC in Canary Wharf, London On 11 May 2011 the new chief executive Stuart Gulliver announced that HSBC would refocus its business strategy and that a large-scale retrenchment of operations, particularly in respect of the retail sector, was planned. HSBC would no longer seek to be 'the world's local bank', as costs associated with this were spiralling and US$3.5bn needed to be saved by 2013, with the aim of bringing overheads down from 55% of revenues to 48%. In 2010, then-chairman Stephen Green planned to depart HSBC to accept a government appointment in the Trade Ministry. Group Chief Executive Michael Geoghegan was expected to become the next chairman. However, while many current and former senior employees supported the tradition of promoting the chief executive to chairman, many shareholders instead pushed for an external candidate. HSBC's board of directors had reportedly been split over the succession planning, and investors were alarmed that this row would damage the company. On 23 September 2010, Geoghegan announced he would step down as chief executive of HSBC. He was succeeded as chief executive of HSBC by Stuart Gulliver, while Green was succeeded as Chairman by Douglas Flint; Flint was serving as HSBC's finance director (chief financial officer). August 2011: Further to CEO Stuart Gulliver's plan to cut $3.5 billion in costs over the next 2 years, HSBC announced that it will cut 25,000 jobs and exit from 20 countries by 2013 in addition to 5,000 job- cuts announced earlier in the year.