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.

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:

INDEX
SR.N
O

TOPIC

PAGE
NO.

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19

HISTORY
FINANCIAL INCLUSION
EMPLOYEE VOLUNTEERING
HSBC HOLDING PLC
PROJECTS EDUCATION
PRODUCTS OF HSBC
OPERATIONS
GLOBAL PRODUTS LINE
CORPORATE SUSTAINABILITY
MONEY LAUNDERING
OTHER CONTROVERSIES
LOGO
SPONSORSHIPS
COMPANY OVERVIEW
KEY EXECUTIVES FOR HSBC
HSBCS KEY DEVELOPMENTS
HSBC GROUP MEMBERS
CONCLUSION
BIBLIOGRAPHY

6-11
12-14
15-16
17-18
19-22
23-29
30-35
36-37
38-39
40-41
42
43
44-45
46
47
48-49
50-51
52-53
54

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

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
Crdit 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 20072010 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.

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. The consumer banking division
of HSBC will focus on the UK, Hong Kong, high-growth markets such as Mexico, Singapore,
Turkey and Brazil, and smaller countries where it has a leading market share. According to
Reuters, Chief Executive Stuart Gulliver told the media, "There will be further job cuts. There
will be something like 25,000 roles eliminated between now and the end of 2013."
In August 2011 "to align our U.S. business with our global network and meet the local
and international needs of domestic and overseas clients", HSBC agreed to sell 195 branches in
New York and Connecticut to First Niagara Financial Group Inc for around $1 billion and
announced the closure of 13 branches in Connecticut and New Jersey. The rest of HSBC's U.S.
network will only be about half from a total 470 branches before divestments. On 9 August 2011,
Capital One Financial Corp. agreed to acquire HSBC's U.S. credit card business for $2.6 billion,
9

netting HSBC Holdings an estimated after-tax profit of $2.4 billion. In September it was
announced that HSBC seeks to sell its general insurance business for around $1 billion.
In 2012, HSBC was the subject of hearings of the U.S. Senate permanent subcommittee
for investigations for severe deficiencies in its anti money laundering practices. On 16 July the
committee presented its findings. Among other things it concludes that HSBC has been
transferring $7 billion in banknotes from its Mexican to its US subsidiary, much of it related to
drug dealing, was disregarding terrorist financing links and was actively circumventing U.S.
safeguards to block transactions involving terrorists, drug lords and rogue regimes, including
hiding $19.4 billion in transactions with Iran.
In July 2012 HSBC came under investigation for allegedly assisting in the money
laundering of drug dealers and terrorist money for many years, after a probe by the US Federal
Reserve and Office of the Comptroller of the Currency found that there was "significant potential
for unreported money laundering or terrorist financing".
On 11 December 2012, HSBC agreed to pay a record $1.92 billion fine in this money
laundering case. "Bank officials repeatedly ignored internal warnings that HSBC's monitoring
systems were inadequate, the Justice Department said. In 2008, for example, the CEO of HSBC
Mexico was told that Mexican law enforcement had a recording of a Mexican drug lord saying
that HSBC Mexico was the place to launder money." The DOJ, however, decided not to pursue
criinal penalties, a decision which the New York Times labelled a "dark day for the rule of law
"We accept responsibility for our past mistakes. We have said we are profoundly sorry for
them, and we do so again." HSBC Chief Executive Stuart Gulliver said.
A 32-page brochure published on the HSBC website provides details of 2012 results in
terms of markets, strategies, and businesses, as well as giving an outline of future plans.
In July 2013, Alan Keir was appointed Chief Executive of HSBC Bank plc after Brian
Robertson resigned from his post. Keir's duties include overseeing the firm's UK, European,
Middle Eastern and African divisions.

10

Since 2013
In June 2014, an indirect wholly owned subsidiary HSBC Life (UK) Limited agreed to sell its
4.2 billion UK pensions business to Swiss Re.

11

FINANCIAL INCLUSION
Education
HSBC partners with nongovernmental organisations across the country, which works with
children from underprivileged communities. Our project support helps children go to school,
learn in a joyful environment and learn to live a healthy life. We also work with young
adults to provide vocational training and life skills so that they are able to help themselves
lead a productive life. At HSBC we believe "Education is key to every success".
Educational initiatives at HSBC provide opportunities to underprivileged children to explore
their untapped potential and equip them with necessary skills and qualifications. Our project
support helps children to go to school, learn in a joyful environment and learn to live a
healthy life. We also work with young adults to provide vocational training and life skills so
that they are able to help themselves lead a productive life.
Life Skills
Life skills programmes supported by HSBC provides tailor made training to underprivileged
youth. Youth are enabled to gain access to opportunities for sustainable livelihoods and
financial literacy to help them lead a productive life.
Womens Empowerment
The plight of women in rural India is well documented. The pressure on survival against the
backdrop of poor or no education, failing health, low agricultural productivity and
degradation of environment, affects women and children the most. In a majority of cases, in
the modern India of today, women are still unable to break out of vicious cycle of gender
bias, deprivation and victimization, imposed on them, sometimes by tradition, and at other
times by their economic environment and compulsions. One way of resolving this dilemma
is to devise financial literacy programmes, which intervene in the lives of rural poor women.
HSBC supports projects that provide entrepreneurial trainings and information access to
make dignified economic opportunities and self-sufficiency a possibility.

The HSBC Scholarships Programme

12

The programme aims to nurture leaders around the world and help build global knowledge
with the accompanying expectation that the lifelong careers of the scholarship recipients
will be marked by significant contributions to the community in which they live and work.
Over time, the HSBC Scholars will form an influential international alumni network,
bringing vision and commitment to improving lives of citizens throughout the world. The
scholars are thus expected to use their education for the benefit of others. A total of 15
scholarships have been awarded till date.

Future First - Investing in our Children

Launched in November 2006, Future First is a 5year, US$ 10 million initiative of the
HSBC Global Education Trust to provide education and life skills training to street children,
orphans and children in care in countries where HSBC has a presence. The programme aims
to deliver a lasting impact in the lives of these children by offering support to local notfor
profit organisations working directly with underprivileged children and SOS Childrens
Villages the worlds largest charity for orphans. As part of this initiative, projects are
considered for support of upto US$ 25,000 per year for a period of 1 to 3 years. As of March
2008, Future First has supported over 115,767 children through 111 projects across 37
countries.
Livelihoods
HSBC works in partnership with SHARE (Society to Heal, Aid, Restore and Educate) and
SCESA (Sophia College ExStudents Association) in Raigad district to empower villagers
through Rain Water Harvesting techniques and small economic activity. Establishing women
SHGs and providing economic independence to women in villages have created life of
dignity, respect and happiness.
Microfinance
HSBC started with a lending programme for small Microfinance Institutions (MFIs) in
2005, but after having built up a reasonable degree of understanding of this segment, have
13

started offering commercial loan products to large MFIs also to help them provide micro
credit to the financially excluded in India. These institutions provide small loans to groups
of poor people (mostly women) using wellestablished micro credit delivery methodologies.
We have sanctioned facilities totalling INR 660M between JanApr08 to MFIs and
presently the total number of members covered by MFIs, which have accepted our facilities,
is 3.2M.
In 2008, we have put in place a microfinance strategy, with the objective of increasing our
presence in this segment and building around a lending portfolio, a host of services which
can facilitate capacity building, improve operational efficiency and bring the best practices
of a transactional banking business to the microfinance domain.

Environment
HSBC India supports nature, habitat and biodiversity conservation, water harvesting and climate
change initiatives. These projects are designed to ensure that economic development does not
take place at the expense of the environment and the awareness component ensures that a large
number of varied audiences are exposed to environmental messages.

EMPLOYEE VOLUNTEERING
14

Employees are encouraged to participate in the community projects supported by HSBC.

HSBC launched Employee Volunteering in India in 2007 in a new format to enhance
volunteering participation. The programme has been named Catalyst and has being
deployed across HSBC branches and Group Companies in India.

Annual Helping Hands Mela: HSBC employees organises a pan India activity at
HSBC branches to encourage charitable giving through sale of products designed by NGOs
and communities.

Junior Achievement Mentoring Programme: Employees from HSBC Chennai are

educating students about entrepreneurship, work readiness, and financial literacy through
experiential, handson programmers.

Kuch Dil Se Payroll Giving Programme: Employees donate monthly to charities

working in the education and environment space through a payroll debit programme
implemented in partnership with Give Foundation.

Mumbai Marathon 2008: 90 employees ran the Mumbai Marathon and raised
pledges for SPJ Sadhana School for the Developmentally Handicapped, to enable
differentially abled children avail of opportunities to study, experience and enjoy their
childhood thus empowering them to lead a constructive and selfreliant life.

HSBC Climate Champions 2008: Under the HSBC Climate Partnership,

employees are given an opportunity to volunteer in projects to fight climate change and
drive environmental changes and practices within the organisation. In 2008, 13 colleagues
have been chosen from India to be HSBC Climate Champions and to participate in a two
week regional field programme in a rainforest in Malaysia.

World Environment Day 2008: India was one of the 20 countries within the HSBC
Group that participated in celebrating World Environment Day on 05 June 2008. About 1000
15

employees across India participated in various environment projects supported by HSBC

and clocked over 8000 volunteering hours in the community.

Breaking Barriers Celebrating with a Difference: HSBC offers employees an

opportunity to celebrate their success through participating in community events and sharing
their stories. Called Breaking Barriers, this businesscommunity engagement format has
been utilised by numerous businesses and functions to celebrate their success with team
members and community. HSBC Marketing team of 60 members visited three villages in
Raigad district and engaged with the community in building trenches and understating
watershed development projects, teaching children and engaging with Self Help Groups
(SHGs) and villagers.

Volunteering Action Fortnight: First Volunteering Action Fortnight was celebrated

between 14 28 November 2006 across India which received an overwhelming response
from employees. Large number of employees from all branches, departments and Group
Companies participated enthusiastically and engaged with NGOs/Communities to
understand their work. More than 4000 volunteering hours was recorded in the fortnight
with over 400 employees participating. This continues to be an annual event for employees
to volunteer in large numbers.

HSBC HOLDINGS PLC

16

Type

Public limited company

LSE: HSBA
Traded as
SEHK: 0005 NYSE: HSBC
Industry Banking, Financial services
1865, Hong Kong (The Hongkong
Founded and Shanghai Banking Corporation)
1991 (HSBC Holdings plc)
Founders Thomas Sutherland
8 Canada Square,
Headquarters Canary Wharf,
London, United Kingdom
Area served Worldwide
Douglas Flint
Key people

(Group Chairman)

Stuart Gulliver
(Group Chief Executive)

Services

Credit cards, consumer banking,

corporate banking, investment
banking, mortgage loans, private
banking, wealth management
US$ 68.18 billion (2013)

Revenue
Operating
US$22.56 billion (2013)
income
Profit
US$16.20 billion (2013)
Total assets
US$2.671 trillion (2013)
Total equity US$181.8 billion (2013)
Employees 254,066 (2013)
HSBC Bank plc, The Hongkong and
Shanghai Banking Corporation,
HSBC GLT India, HSBC Bank USA,
Subsidiaries
HSBC Bank Middle East, HSBC
Mexico, HSBC Bank Brazil, HSBC
Finance, HSBC GLT Malaysia
Website
www.hsbc.com
HSBC Holdings PLC is a British multinational banking and financial services company
headquartered in London, United Kingdom. It is the world's second largest bank. It was founded
in London in 1991 by the Hongkong and Shanghai Banking Corporation to act as a new group
holding company. The origins of the bank lie in Hong Kong and Shanghai, where branches were
first opened in 1865. The HSBC name is derived from the initials of the Hongkong and Shanghai
17

Banking Corporation. As such, the company refers to both the United Kingdom and Hong Kong
as its "home markets".
HSBC has around 6,600 offices in 80 countries and territories across Africa, Asia, Europe, North
America and South America, and around 125 million customers. As of 31 December 2013, it had
total assets of $2.671 trillion, of which roughly half were in Europe, the Middle East and Africa,
and a quarter in each of Asia-Pacific and the Americas. As of 2012, it was the world's largest
bank in terms of assets and sixth-largest public company, according to a composite measure by
Forbes magazine.
HSBC is organised within four business groups: Commercial Banking; Global Banking and
Markets (investment banking); Retail Banking and Wealth Management; and Global Private
Banking.
HSBC has a dual primary listing on the Hong Kong Stock Exchange and London Stock
Exchange and is a constituent of the Hang Seng Index and the FTSE 100 Index. As of 6 July
2012 it had a market capitalisation of 102.7 billion, 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.

PROJECTS EDUCATION
HSBC partners with nongovernmental organizations across country that works with
children from underprivileged communities. Our support helps children go to school and
learn in a joyful environment. Some of the educational projects supported by HSBC India
are:
18

SOS Children's Villages: HSBC supports the work of SOS Children's Villages in
New Delhi, Kolkata, Bhuj, Anagpur and Latur. SOS India's mission is to provide abandoned
and orphaned children with a family, a home, education and a foundation for an independent
life.

Child link Foundation (Magic Bus): HSBC supports a group of street children
between the age of 810 years at Magic Bus by facilitating their nonformal education
through outdoor sports, day trips and weekend trips.

HSBC Gijubhai BAL Academy with Ganatar, Patadi, Surendranagar district,

Gujarat: HSBC works with Ganatar to educate children of salt pan workers by establishing
schools in desert communities. On campus, Ganatar conducts teacher training programmes
and vocational courses for children from the Raan of Kutch.

Happy Home and School for the Blind, Mumbai: Happy Hope imparts education
for blind and visually impaired children. HSBC provides support to their annual pottery
workshop and exhibition.

Future Hope: is a home and school for street children in Kolkata, supported by
HSBC through annual donations.

Prayas: Prayas works for the care, protection and rehabilitation of neglected street
and working children. HSBC supports the Naya Prayas project in Delhi slums and helps
provide outofschool children with education.

Doorstep School: Doorstep school works in slum communities around Mumbai's

port areas to establish Early Childhood Education (ECE) centers. It is an effort to commence
a systematic and early educational intervention in the lives of the children from the
community.
19

SUPPORT: SUPPORT helps children on street of Mumbai who are prey to drug
abuse, crime and disease by mainstreaming them and offering complete rehabilitation. It
provides an opportunity for better life for these children through education, medical care,
return to families/ parents, vocational training and livelihood assistance.

Sense International (India): Sense International (India) is a leading organization in

South Asia developing programmes for deaf blind people. They enable and empower local
partners to provide direct services to deaf blind people. As a result of their work there are
now 33 deaf blind programmes in 17 different states of India.

Nanhi Kali: A project jointly managed by K. C. Mahindra Education Trust and

Naandi Foundation. Nanhi Kali is a nationwide project to support the education of
disadvantaged girls. Ensuring that girls are in school and that they get 10 years of
uninterrupted formal quality education is the aim of the project.

The Foundation for Mother and Child Health, India: works to improve the lives
of mothers and children in local communities by providing long term programmes focused
on health, nutrition, education, and sustainable skills training programmes.

Azim Premji Foundation: HSBC supports Computer Aided Learning Programme

(CALP) to create an environment where learning is fun and the opportunities to learn are
equal. This project focuses on rural Government elementary schools covering classes 1 to 8
to attract children to school, retain them in school and to enhance the quality of learning in
school.

Welfare Society for the Blind: conducts vocational training programmes for adult
persons with visual disability to equip them with the skills and competence to gain a degree
of economic selfsufficiency.

20

Goonj: A unique resource mobilization initiative channelising clothes and other

basic amenities to millions in the far flung areas by turning one's wastage into resource for
another. Initiated in 1998 with just 67 clothes, they now send out over 10,000 kgs of
material every month in 18 states.

Butterflies, Delhi: has been working with street and working children in Delhi since
1989. The project has started a mobile van service with computer training and
banking/savings facilities for street children at 12 key street children contact points in Delhi.

Deepalaya, Delhi: aims to bring about sustainable development in poor

communities through educational interventions at three levels i.e., the child, the family &
the community. The project being supported is educating 750 children from Patpar Ganj
slum in East Delhi and mainstream them into the formal education system

Navjyoti Delhi Police Foundation, Delhi: was founded by Dr Kiran Bedi and 17
other likeminded officials of Delhi Police. The project being supported is to run seven
libraries for 4000 underprivileged children in the age group of 4 to 16 years.

Yusuf Meherally Centre, Delhi: established in 1961 and working for the welfare of
needy and landless rural people for the last 38 years. A project to provide400
begging/working children in Delhi education, life skills and counselling is being supported.

Children Toy Foundation, Mumbai: The organisation has been instrumental in

setting up 194 Toy Libraries all over India, 86 in Mumbai alone. The project has set up a
'Khelvigyan Center' in Baroda with toys that engage children who otherwise have little
access to healthy, exciting and educational forms of recreation.

Salaam Baalak Trust, Mumbai: established in1988 with a portion of the proceeds
from the film "Salaam Bombay!" by Mira Nair. It aims to give street children choices and a
chance to experience the joys of childhood; HSBC is supporting a night shelter at
21

Umerkhadi that acts as a safe haven for 30 homeless girls.

Parivartan Social Welfare Society, Kolkata: currently runs 80 community based

education centres in three municipalities serving about 2000 children every year. The being
supported aims to provide quality education to 400 outofschool children

Loreto Day School. Sealdah: 'Off to school programme' a unique project for
homeless children that bring the privileged and the less fortunate together in one classroom.
It is a school in the day and a shelter for girls by night.

Jeevodaya Society, Itarsi: The construction of the shelter for homeless girls from
Itarsi railway station, which serves as a safe and protected environment for these girls.

Light of Life Trust, Karjat (Maharashtra) HSBC supports ANANDO, a project

for the education and integration of outofschool children in Karjat, Madgaon and Alibag.
ANANDO adopts the E3 Approach Educate; Empower Equip / Employ.

Shoshit Seva Sangh, Patna: A new residential school known as Shoshit Samadhan
Kendra is being supported to provide education and vocational training to children of the
'Mushar' (rat catcher) community former untouchables living in the outskirts of Bihar
villages.

CSR Course at HR College of Commerce and Economics: HSBC has partnered

with the HR College of Commerce and Economics to deliver CSR learning modules through
a series of interactive sessions with the objective of sensitising students in their formative
years on the benefits of CSR. This initiative will enable students in their professional and
personal lives to comprehend the importance of CSR and act in an ethical and sustainable
manner

PRODUCTS OF HSBC
22

Saving for Education: Plans and Products

Smart planning and saving for education expenses
Saving to fund your children or grandchildren's education can be challenging, yet very
rewarding. Designing an education savings plan to accumulate the right amount of assets at the
right time is critical. Following the plan in a disciplined way, while adjusting it periodically to
account for the rising cost of a college education, is also important.

529 College Savings Plans1

With a 529 plan, all contributions are made post-tax for federal income tax purposes.
Some states also offer tax-deductible contributions for residents. The benefit to you is that your
contribution will grow on a tax-deferred basis, and your distribution to pay for college can also
be made tax-free. Investors should be mindful that 529 College Savings Plans are municipal
securities and may be subject to market volatility and fluctuation.
Another great benefit is that you, as the account owner, will have control over the funds. Many
plans will even allow you to reclaim the funds for yourself if your needs change.

Evaluating education savings vehicles

Parents and grandparents can choose among a handful of investment programs, some of which
offer tax advantages while saving for education expenses. In addition to 529 College Savings
Plans, other plans are available and have been detailed in the comparison chart below. Speak
with a financial professional2 from HSBC Securities (USA) Inc. by calling 866.586.4722 or
schedule a consultation online for complete plan details

23

Coverdell Education
529 College

Savings Accounts

Custodial Accounts

Savings Plans1

(ESAs)

(UGMA/UTMA)

What's the core

plan structure?

Tax-advantaged
investment account
selected by parent
with state-provided
choices available

Tax-advantaged investment
account in which parents can
choose to invest in mutual
funds3, stocks5, bonds4 and
more

Irrevocable gift to a minor,

managed by an adult
custodian

What can the

funds be used
for?

Qualifying college
expenses

Qualifying elementary,
secondary, and college
expenses

Any purpose benefitting the

minor

Who may open

an account?

Generally any adult,

though details may
vary by state

Anyone whose adjusted gross

income is less than $110,000
for single filers and $220,000
for married/joint filers

Any adult

May friends and

family
contribute to the
plan?

Yes, in most cases

Yes

No

Maximum
contributions

Annually: $13,000(individual) / $26,000

(joint) -or- lump sum:
$65,000 (individual) /
$130,000 (joint) in the
first of a five year
period

Annually: $2,000

$13,000 a year w/o

mandatory filing Form 709
& possible payment of gift
taxes

Forms of
acceptable
funding

Cash

Cash

Cash, securities, real

estate, art, patents,
royalties, and more

Tax implications
Contributions

Federal: not
deductible
State: varies by state

Federal: not deductible

State: not deductible

Federal: not deductible

State: not deductible

24

Coverdell Education
529 College

Savings Accounts

Custodial Accounts

Savings Plans1

(ESAs)

(UGMA/UTMA)

Tax implications
Earnings

Tax-free when used

for qualifying
expenses

Tax-free when used for

qualifying expenses

Taxed

Expiration age
and transfer
flexibility

Funds may be
disbursed for
qualifying expenses
for a beneficiary of
any age. Transfers to
other family members
are allowed

Funds must be transferred to

another eligible family
member or disbursed for
qualifying expenses before the
beneficiary turns 30, unless
the beneficiary is an individual
with special needs, in order to
avoid penalties

Custodial supervision ends

when minor reaches age of
majority which varies by
state. No transfers a gift is
irrevocable

What are structured products?

Structured products1 are investment vehicles based on or derived from a single security, a
basket of securities, an index, a commodity, a debt issuance and/or a foreign currency. Structured
products have a fixed maturity date and are designed to offer specific risk-return tradeoffs, with
pre-set formulas for both the potential risk and potential return. However, these calculations are
often complex.
Some structured products offer protection of the principalwhen held to maturity, subject
to issuer credit risk, thus offering a lower risk than investing in the underlying asset directly.
Others do not guarantee principal, but may provide a partial buffer against loss or offer the
potential for enhanced returns.
Principal Protected Market-Linked Certificates of Deposit (CD) from HSBC2

25

A Market-Linked CD is a bank deposit product with returns tied to an underlying asset

type.
In addition to providing an efficient means of portfolio diversification, the variety of
market-linked CDs issued by HSBC Bank USA, N.A. and made available through HSBC
Securities (USA) Inc. offer:
A degree of upside exposure to the potential price appreciation in a variety of underlying
assets3
A range of terms to match your investing timeline
100% principal protection if held to maturity, subject to the issuer's credit risk2
The security of FDIC insurance4
Access to various U.S. and international markets5

Fixed income products

What are fixed income investments?

Fixed income1 investments generally provide an established return on a fixed schedule.
One of the most popular types of fixed income products are bonds, through which you lend
money to a government, municipality, corporation, federal agency or other entity known as an
issuer. In return for that money, the issuer provides you with a bond in which it promises to pay a
specified rate of interest during the life of the bond and to repay the face value of the bond (the
principal) when it matures, or comes due. Many of these investments can offer tax-free returns
on the municipal, state and federal levels. Individual bonds can be useful in a strategy that seeks
to preserve capital and generate a predicable return when they are held to maturity, subject to
issuer credit risk2.

26

An array of fixed income products

HSBC Securities (USA) Inc. offers access to a wide variety of fixed income products including:
Municipal bonds: Debts issued by states, municipalities or counties that are free from
federal taxes and usually free of state and local taxes3. Municipal Securities may be
subject to the federal Alternative Minimum Tax.
Treasury notes and bonds: U.S. Government debt that carries a fixed interest rate,
usually with a maturity of 1-10 years. Interest income is exempt from state and local
income taxes, but subject to federal income taxes.4
Government-sponsored enterprises (GSEs) / Agency: Bonds issued by financing
entities created by Congress to fund loans to certain groups of borrowers such as
homeowners, farmers and students. i.e. Federal National Mortgage Association (Fannie
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) are privately owned
corporations, while the Federal Home Loan Banks and the Federal Farm Credit Banks are
systems comprising regional banks. All GSE debt is not guaranteed by the federal
government, whereas government agencies such as Government National Mortgage
Association (Ginnie Mae) are divisions of the government whose securities are backed by
the full faith and credit of the United States.
Sovereign bonds: Issued by a national government and denominated in a foreign
currency5
Domestic corporate bonds
Unit Investment Trust or Bond Funds6
Brokered CDs7

What are mutual funds?

27

Mutual funds1 are a type of pooled investment vehicle. Shareholders of a mutual fund
invest their money by purchasing shares of the fund. The money that they pay for the shares is
pooled together and invested in a portfolio of securities, such as stocks, bonds, or money market
instruments. Mutual funds are professionally managed and operated by money managers, who
maintain the portfolio in accordance with the fund's investments objectives as stated in the
prospectus.
Popular investment disciplines which can involve mutual funds include:
Asset allocation2: a disciplined approach to long-term investing, designed to seek
consistent exposure to markets. This approach does not guarantee a profit or protect
against a loss. It also cannot eliminate the risk of fluctuating prices and uncertain returns.
However, it may be used in an effort to manage risk and enhance returns.
Dollar cost averaging3: a strategy in which securities, typically mutual funds, are
purchased in fixed dollar amounts at regular intervals, regardless of what direction the
market is moving. While this method doesn't guarantee against losses, over time, this can
help to reduce the average cost of acquired shares.
Target date ("life cycle") investing4: investors choose a fund with a specified target
date near a personal need or goal (such as retirement) for which they will need to access
their invested funds. Though target date investing does not protect against loss of
principal, the fund's risk exposure is gradually reduced as a target date draws nearer to
prepare for the approaching liquidity needs.

Mutual funds built on HSBC's global capabilities

Our World Selection Funds5 offer asset allocation solutionsdesigned to help minimize
the roller-coaster ride that volatile market conditions can generate. The five different fund
strategies are aligned to a the full spectrum of risk profiles: Income Strategy Fund, Conservative
Strategy Fund, Moderate Strategy Fund, Balanced Strategy Fund and Aggressive Strategy Fund.
Explore our other exclusive asset allocation solutions.
In addition, the suite of HSBC Funds6 includes domestic money market funds and
domestic and international equity and debt funds7. The HSBC Emerging Markets Debt Fund,
28

HSBC Emerging Markets Local Debt Fund, HSBC Frontier Markets Fund, HSBC Total Return
Fund and the HSBC RMB Fixed Income Fund all provide access to some of the world's fastest
growing markets through the lens of HSBC's deep global knowledge and experience.

Mutual funds from the world's leading managers

A financial professional8 from HSBC Securities can not only provide access to the
competitive funds managed by HSBC, but also help you choose from a broad selection of thirdparty mutual funds. Each of these funds is thoroughly screened and regularly reviewed by HSBC
Wealth Portfolio Management Americas team 9 a global team of research analysts dedicated to
identifying third party money managers with competitive advantages in their asset class, to
enhance our clients' portfolios.

Take advantage of our mutual fund experience

Mutual funds offer a convenient avenue for entering financial markets and can also
become integral parts of a broader investment strategy. To fully understand your personal
investment objectives and help determine which mutual funds may be suited for your needs, an
HSBC Securities financial professional8 will take the time to conduct a thorough financial
review. To schedule your review, or to receive information on HSBC mutual funds, please call
866.586.4722 or schedule a consultation online.

OPERATIONS
29

HSBC has its world headquarters at 8 Canada Square in Canary Wharf, London.
HSBC has a significant presence in each of the world's major financial markets, with the
Americas, Asia Pacific and Europe each representing around one third of its business. HSBC is
the largest bank in Hong Kong and prints most of Hong Kong's local currency in its own name.
As of 2 April 2008, according to Forbes magazine, HSBC was the fourth-largest bank in the
world by assets (with $2,348.98 billion), the second largest in terms of revenues (with
$146.50 billion) and the largest in terms of market value (with $180.81 billion). It was also the
most profitable bank in the world with $19.13 billion in net income in 2007 (compared to
Citigroup's $3.62 billion and Bank of America's $14.98 billion in the same period). In June 2006,
The Economist stated that since the end of 2005 HSBC has been rated the largest banking group
in the world by Tier 1 capital. In June 2014 The Banker ranked HSBC first in Western Europe
and 5th in the world for Tier 1 capital. In February 2008, HSBC was named the world's most
valuable banking brand by The Banker magazine.
HSBC is known for a conservative and risk-averse approach to business a company
tradition going back to the 19th century. This reputation has been brought into question in the
21st century.
In its technical management, however, HSBC has recently suffered a series of headlinemaking incidents in which some customer data were allegedly leaked or simply went missing.
Although the consequences turned out to be small, the embarrassing effect on the group's image
did not go unnoticed.
HSBC is currently audited by one of the Big Four auditors, KPMG. The HSBC and
KPMG headquarters are adjacent to one another, with KPMG occupying 15 Canada Square.
HSBC Main Building, Hong Kong is also adjacent to KPMG office located in Prince's Building.
A decision on 2 August 2013 made public that PricewaterhouseCoopers will take on the HSBC
audit in 2015.
In the six months to 30 June 2014, the bank reported a 7.33 billion ($12.34 billion) profit before
tax, down from $14.07 billion for the comparable period in 2013.

30

Principal subsidiaries
Asia Pacific

HSBC Bank Armenia

HSBC Bank Australia Limited

The Hongkong and Shanghai Banking Corporation Ltd

o Hang Seng Bank Ltd
o HSBC Bank (China) Company Ltd

HSBC Bank Malaysia Berhad

HSBC Bank Philippines Ltd

HSBC Bank India

HSBC Bank Indonesia

HSBC Bank Bangladesh

HSBC Sri Lanka

HSBC Bank Pakistan

HSBC Bank Vietnam

Europe

HSBC France
31

HSBC Trinkaus und Burkhardt AG

HSBC Bank International the offshore banking arm of the HSBC Group, focusing on
providing offshore solutions and cross border services to expatriates and migrants. It
provides a full range of multi-currency personal banking services to a range of customer
segments, including a full internet banking and telephone banking service. Sometimes
referred to as "HSBC Offshore", the business also offers independent financial planning,
and has representative offices all over the world, often working alongside local HSBC
operations in those regions. HSBC Bank International originated from the business
started by Midland Bank and is based in the Channel Islands with further operations on
the Isle of Man. Its operations in the Channel Islands are centred around its headquarters
on the seafront in St Helier, Jersey.

HSBC Bank Malta plc

HSBC Bank A..

HSBC Private Bank (UK) Ltd

HSBC Bank plc

Americas
The headquarters of HSBC Brazil in Curitiba

HSBC Bank USA Inc

HSBC Finance Corporation

HSBC Bank Canada

Middle East and North Africa

32

HSBC Bank Middle East Ltd

HSBC Bank Egypt SAE

The Saudi British Bank

Principal business groups and divisions

HSBC organizes its customer-facing activities within four business groups: Commercial
Banking; Global Banking and Markets (investment banking); Personal Financial Services (retail
banking and consumer finance); and Global Private Banking.

Commercial Banking
HSBC provides financial services to small, medium-sized and middle-market enterprises.
The group has more than 3 million of such customers, including sole proprietors, partnerships,
clubs and associations, incorporated businesses and publicly quoted companies.
Global Banking & Markets
Global Banking and Markets is the investment banking arm of HSBC. It provides
investment banking and financing solutions for corporate and institutional clients, including
corporate banking, investment banking, capital markets, trade services, payments and cash
management, and leveraged acquisition finance. It provides services in equities, credit and rates,
foreign exchange, money markets and securities services, in addition to asset management
services.
Global Banking and Markets has offices in more than 60 countries and territories worldwide, and
describes it as "emerging markets-led and financing-focused".

33

Global Banking and Markets is currently being led by former fixed-income trader Samir Assaf,
who was promoted from global head of markets on 10 December 2010.

Global Private Banking

Main article: HSBC Private Bank
The main London office of HSBC Private Bank in St James's
HSBC Private Bank is the marketing name for the private banking business conducted by
the principal private banking subsidiaries of the HSBC Group worldwide. HSBC Private Bank,
together with the private banking activities of HSBC Trinkaus, known collectively as Group
Private Banking, provides services to high net worth individuals and their families through 93
locations in some 42 countries and territories in Europe, the Asia-Pacific region, the Americas,
the Middle East and Africa. As of December 2007, profits before tax were US$1,511 million and
combined client assets under management were US$494 billion.
In September 2008, HSBC announced that it would combine its two Swiss private banks
under one brand name in 2009, with HSBC Guyerzeller and HSBC Private Bank to be merged
into one legal entity, under the newly appointed CEO of HSBC Private Bank, Alexandre Zeller.

Retail Banking and Wealth Management

HSBC provides more than 54 million customers worldwide with a full range of personal
financial services, including current and savings accounts, mortgage loans, car financing,
insurance, credit cards, loans, pensions and investments.
Retail Banking and Wealth Management (also known as RBWM) was previously referred to as
Personal Financial Services (PFS). This rename was announced during HSBC's 2011 Investor
Day.
34

Group Service Centres

As a cost-saving measure HSBC is offshoring processing work to lower cost economies in order
to reduce the cost of providing services in developed countries. These locations take on work
such as data processing and customer service, but also internal software engineering at Pune
(India), Bangalore (India), Hyderabad (India), Vishakhapatnam (India), Calcutta (India),
Guangzhou (China), Curitiba (Brazil) and Kuala Lumpur (Malaysia).

The HSBC Global Technology Centre in Pune, India

Chief Operating Officer Alan Jebson said in March 2005 that he would be very surprised
if fewer than 25,000 people were working in the centres over the next three years: "I don't have a
precise target but I would be surprised if we had less than 15 (global service centres) in three
years' time." He went on to say that each centre cost the bank from $20m to $30m to set up, but
that for every job moved the bank saves about $20,000 (10,400).
Trades unions, particularly in the UK and US, blame these centres for job losses in
developed countries, and also for the effective imposition of wage caps on their members.
Currently, HSBC operates centres out of nine countries, including; United Kingdom
(Leeds, Hamilton, Edinburgh, Swansea, Manchester, Coventry & Leicester), Brazil (Curitiba),
the Czech Republic (Ostrava), India (Calcutta, Hyderabad, Bangalore, Visakhapatnam, Bombay,
Gurgaon and Pune), China (Shanghai, Guangzhou and Shenzhen), Malaysia (Kuala Lumpur),
Poland (Krakow), Sri Lanka (Rajagiriya) and the Philippines (Manila). The Malta trial for a UK
high value call centre has resulted in a growing operation that country.

35

GLOBAL PRODUCT LINES

HSBC Direct
HSBC Direct is a telephone/online direct banking operation which attracts customers
through mortgages, accounts and savings. It was first launched in USA in November 2005 and is
based on HSBC's 'First Direct' subsidiary in Britain which was launched in the 1980s. The
service is now also available in Canada, Taiwan, South Korea, France and India. Poland is
launching business direct in September 2009. In US, HSBC Direct is now part of HSBC
Advance.

HSBCnet
HSBCnet is a global service that caters to local business needs by offering specialised
functionality for different regions worldwide.
The system provides access to transaction banking functionality ranging from payments
and cash management to trade services features as well as to research and analytical content
from HSBC. It also includes foreign exchange and money markets trading functionality.

36

The system is used widely by HSBC's high-end corporate and institutional clients served
variously by the bank's global banking and markets, commercial banking and global transaction
banking divisions.
HSBCnet is also the brand under which HSBC markets its global e-commerce
proposition to its corporate and institutional clients.

HSBC Advance
HSBC Advance is the group's product aimed at working professionals. The exact benefits
and qualifications vary depending on country, but typically require a transfer of Salary of USD
1,500 or more every month or Maintain USD 25,000 of deposits in a Savings/Current Account or
investments. Advantages may vary depending on country, such as day-to-day banking services
including but not limited to a Platinum Credit Card, Advance ATM Card, Current Account and
Savings Account. Protection plans and Financial Planning Services. A HSBC Advance customer
enables the customer to open accounts in another country and transfer their credit history.

HSBC Premier
HSBC Premier is the group's premium financial services product, comparable to the
Centurion service of American Express. It has its own Elite Card entitled HSBC Premier World
Card. The exact benefits and qualification criteria vary depending on country. Customers have a
dedicated Premier Relationship Manager, global 24-hour access to call centres, free banking
services and preferential rates.

37

What we mean by Corporate Sustainability?

At HSBC, sustainability means managing our business responsibly and sensitively, and ensuring
we include social, economic and environmental factors in the decisions we make to ensure longterm business success. We believe it is our duty to our customers, investors and employees to
foster an ethical, responsible and sustainable corporate philosophy. Our goal is to be one of the
worlds leading brands in corporate sustainability.
Our vision is to be the world's leading financial services company. We want HSBC to be the first
choice for our customers and for our employees the best place to bank, and the best place to
work. We also believe that we can play a role in helping to address the formidable challenges
facing society today and by helping to make the world a better place to live, we will also make
our own business more sustainable. At HSBC, our response is inevitably shaped by the views of
our shareholders, our customers, our colleagues and the wider community; and sustainability is
clearly a theme of growing importance to all of these constituencies. If our owners, customers
and staff consider these issues to be important, this clearly means that our social responsibilities
and sustainability must be at the very core of our business; not just an addon to it. This is why,
our primary objective in our strategic plan states that we aspire to be one of the worlds leading
brands for customer experience and corporate responsibility.
38

We believe a company that behaves ethically, responsibly and believes in sustainability will
ultimately be more successful than its competitors because it addresses issues on which its long
term success depends, and thereby gains the confidence of investors, customers and employees.
The companies that will be our sector's leaders in five, 10 and 50 years time already know that a
commitment to environmental and social sustainability is not a secondary issue; it is a defining
strategy that will help build financially successful global companies of the future.
Our goal is not, and never has been, profit at any cost because we know that tomorrow's success
depends on the trust we build today.

We look to address the expectations of our customers, shareholders, employees and other
stakeholders. Our frequently asked question covers a range of issues including the size of
HSBCs profits, customer indebtedness and executive pay.

Being one of the worlds biggest banks means the decisions we make can have a big
impact. We aim to lend and invest responsibly, avoiding projects where the potential for social
and environmental damage outweighs the economic benefits.

Companies like ours must share responsibility for the environment with governments and
citizens for minimising the damaging effects of human activity pollution of land, water and air
and the depletion of resources.

The world is a rich and diverse place. The better our people reflect this diversity, the
better we can anticipate and meet our customers needs.

Involving our employees in the community brings many benefits. Our employees gain
understanding, confidence and selfesteem. Being recognised in the community also helps
HSBC to attract great people.

Education is crucial to the development and prosperity of every country. By investing in

education, we seek to build the confidence and abilities of young people on whom, as customers
or employees, our business and future success will depend.

39

MONEY LAUNDERING
Money laundering has been an issue in Argentina, India, the United Kingdom and the
United States.
Following search warrants and raids beginning in January 2013, in mid-March 2013
Argentina's main taxing authority accused HSBC of using fake receipts and dummy accounts to
facilitate money laundering and tax evasion.
On 19 July 2012, India assured to get to the bottom of alleged violation of safety
compliance, in which Indian employees are presumed to be involved. On 9 November 2012,
Indian activist and politician Arvind Kejriwal claimed he had details of 700 Indian bank accounts
hiding black money with a total value of 60 billion (US$980 million) with HSBC in Geneva. In
June 2013, a media outlet in India did an undercover expose where HSBC officers were caught
on camera agreeing to launder "black money." HSBC placed these employees on leave pending
their own internal investigation.
In early February 2013, appearing before UK's Parliamentary Banking Standards
Commission, CEO Stuart Gulliver acknowledged that the structure of the bank had been "not fit

40

for purpose." He also stated, "Matters that should have been shared and escalated were not
shared and escalated." HSBC has also been accused of laundering money for terrorist groups.
In both 2003 and 2010, U.S. regulators ordered HSBC to strengthen its anti-money
laundering practices. In October 2010, the United States OCC issued a Cease and Desist Order
requiring HSBC to strengthen multiple aspects of its Anti-Money Laundering (AML) program.
The identified problems included a once massive backlog of over 17,000 alerts identifying
suspicious activity, failure to file timely suspicious activity reports with U.S. law enforcement,
failure to conduct any due diligence to assess risks to HSBC affiliates before opening
correspondent accounts for them, a three-year failure by HBUS from mid-2006 to mid-2009 to
conduct any AML of $15 billion in bulk cash transactions from those same HSBC affiliates,
failure to monitor $60 trillion in annual wire transfers by customers in countries rated lower risk
by HBUS, and inadequate and unqualified AML staffing, resources, and leadership. It was noted
that HSBC fully cooperated with the Senate investigation.
In November 2012 it was reported that HSBC had set up offshore accounts in Jersey for
suspected drug-dealers and other criminals, and that HM Revenue and Customs had launched an
investigation following a whistleblower leaking details of 700 million allegedly held in HSBC
accounts in the Crown dependency .
In December 2012, Assistant U.S. Attorney General Lanny Breuer suggested that the U.S.
government might resist criminal prosecution of HSBC which could lead to the loss of the bank's
U.S. charter. He stated, "Our goal here is not to bring HSBC down, it's not to cause a systemic
effect on the economy, it's not for people to lose thousands of jobs."
In December 2012, HSBC was penalized $1.9 billion (US), the largest fine under the
Bank Secrecy Act, for violating four U.S. laws designed to protect the U.S. financial system.
HSBC had allegedly laundered at least $881 million in drugs proceeds through the U.S. financial
system for international cartels, as well as processing an additional $660 million for banks in US
sanctioned countries. According to the report, "The U.S. bank subsidiary [also] failed to monitor
more than $670 billion in wire transfers and more than $9.4 billion in purchases of physical
dollars from its Mexico unit." As part of the agreement deferring its prosecution, HSBC
41

acknowledged that for years it had ignored warning signs that drug cartels in Mexico were using
its branches to launder millions of dollars, and also acknowledged that HSBC's international staff
had stripped identifying information on transactions made through the United States from
countries facing economic sanctions such as Iran and Sudan.
A February 2013 article in Rolling Stone magazine, which was critical of what they
regarded as the timid response by the U.S. Justice Department, stated "Yes, they issued a fine
$1.9 billion, or about five weeks' profit but they didn't extract so much as one dollar or one day
in jail from any individual, despite a decade of stupefying abuses" and further stated, "In this
case, the bank literally got away with murder well, aiding and abetting it, anyway." A
December 2012 CNNMoney article compared the 1.9 billion dollar fine to HSBC's profit "last
year" (2011) of 16.8 billion.

OTHER CONTROVERSIES
In the report titled "In the Future There Will Be No Forests Left" produced by Global
Witness, the bank is also being accused of supporting the seven largest Malaysian timber
conglomerates which are responsible for rapid deforestation in the Malaysian state of Sarawak
without any FSC certifications. However, the bank declined to divulge its clients on this issue,
citing the confidentiality of its clients; but the bank maintains that the accusations that its clients
violate forestland and forest-products policy is not accurate.
HSBC also held billions of dollars of assets for the Libyan Investment Authority, which
was controlled by Colonel Muammar Gaddafi; after Gaddafi's overthrow and assassination, the
bank refused to reveal information about the funds, citing customer confidentiality.
In 2014 HSBC refused to allow customers to withdraw large cash amounts without a
third-party letter confirming what the money would be used for. Douglas Carswell, the
Conservative MP for Clacton, was alarmed by the HSBC policy: "All these regulations which

42

have been imposed on banks allow enormous interpretation. It basically infantilises the customer.
In a sense your money becomes pocket money and the bank becomes your parent."
In 2014 HSBC closed North London Central Mosque's account and some muslim clients
and group's accounts. Several sources report that HSBC closed them because they donated their
money to Palestine during the massacring.

LOGO

The group announced in November 1999 that the HSBC brand and the hexagon symbol would
be adopted as the unified brand in all the markets where HSBC operates, with the aim of
43

enhancing recognition of the group and its values by customers, shareholders and staff
throughout the world.
The hexagon symbol was originally adopted by the Hongkong and Shanghai Banking
Corporation as its logo in 1983. It was developed from the bank's house flag, a white rectangle
divided diagonally to produce a red hourglass shape. Like many other Hong Kong company flags
that originated in the 19th century, and because of its founder's nationality, the design was based
on the cross of Saint Andrew. The logo was designed by Austrian graphic artist Henry Steiner.

SPONSORSHIPS
The 2004 Jaguar Racing Formula One car, being driven by Mark Webber
Having sponsored the Jaguar Racing Formula One team since the days of Stewart Grand
Prix, HSBC ended its relationship with the sport when Red Bull purchased Jaguar Racing from
Ford. HSBC has now switched its focus to golf, taking title sponsorship of events such as the
HSBC World Match Play Championship, HSBC Women's World Match Play Championship
(now defunct), HSBC Champions and HSBC Women's Champions.
In football HSBC sponsors French club AS Monaco and Mexican club C.F. Pachuca, and
in rugby league, HSBC sponsors Telford Raiders in the Rugby League Conference. In Australia,
HSBC sponsors the New South Wales Waratahs rugby team in Super Rugby rugby union
competition, as well as the Hawthorn Football Club in the Australian Football League.

44

HSBC's other sponsorships are mainly in the area of education, health and the
environment. In November 2006, HSBC announced a $5 million partnership with SOS Children
as part of Future First.
HSBC sponsors the Great Canadian Geography Challenge, which has had around
2 million participants in the past 12 years. Since 2001, HSBC has sponsored the Celebration of
Light, an annual musical fireworks competition in Vancouver, British Columbia, Canada. In 2007
HSBC announced it would be a sponsor of the National Hockey League's Vancouver Canucks
and Calgary Flames. HSBC has also sponsored a professional gaming team that was disbanded
late 2007. HSBC is also committed to local sponsorships, the Mandarins Cricket Club being one
example.
HSBC sponsored the 2009 British and Irish Lions tour to South Africa.
HSBC is the official banking partner of the Wimbledon Tennis Championships, providing
banking facilities on site and renaming the Road to Wimbledon junior event, as the HSBC Road
to Wimbledon National 14 and Under Challenge.
HSBC was named the 'Official Banking Partner' of the Open Championship, in a fiveyear deal announced in 2010.
In October 2010, the International Rugby Board announced that they had concluded a 5year deal with HSBC which granted them status as the first ever title sponsor of the IRB Sevens
World Series. Through the accord, HSBC is paying more than $100 million for the title naming
rights to all the tournaments in the IRB Series, beginning with the Dubai Sevens on 3 December
2010, and ending in the spring of 2015. HSBC opted to sub-license the naming rights to all but
one of the individual tournaments, while retaining its name sponsorship of the overall series as
well as co-sponsorship (with Cathay Pacific) of the world's most famous 7-a-side rugby
tournament, the Hong Kong Sevens.

45

COMPANY OVERVIEW
HSBC Bank USA, N.A. provides commercial banking products and services to
individuals, corporations, institutions, and government agencies. It offers personal financial
services, including installment and revolving term loans, deposits, branch services, mutual funds,
investments, and insurance, as well as residential mortgage lending services through direct retail
and wholesale origination channels. The company also provides private banking services for high
net worth individuals and families, including deposits, tailored credit and banking, investment
management, trust and estate administration, custody, and retirement services, as well as wealth
and tax advisory, philanthropy, family office...

Detailed Description:1800 Tysons Boulevard

Suite 50

Mclean, VA 22101
United States

46

Founded in 1850
Phone: 716-841-7212
Fax: 716-841-2034
www.us.hsbc.com

KEY EXECUTIVES for HSBC Bank USA, N.A.

Mr. Roger K. McGregor
Chief Financial Officer and Senior Executive Vice President
Age: 65

Mr. Paul J. Lawrence

Head of Corporate Investments Banking & Markets (CIBM) for North America
Age: 51

Mr. Brendan Paul McDonagh

Chief Executive Officer of HSBC North America
Age: 55

47

Mr. William Wong

Chief Executive Officer of HSBC Securities

Mr. Andy Ireland

Executive Vice President and Regional President of Upstate Retail Banking

HSBC Bank USA, N.A. KEY DEVELOPMENTS

HSBC Bank USA Faces Suit over Alleged Role in Sale of Death Bonds
Aug 26, 2014

HSBC Bank USA for $250 million over the lender's alleged role in SLS Capital's sale of
so-called 'death bonds'. The complaint filed in the U.S. District Court in Manhattan alleged that
the lender ignored signs of suspicious activity carried out by late British entrepreneur David
Elias through Keydata Investment Services, an investment vehicle he controlled. HSBC served
as a custodian of life insurance policies that backed bonds sold by SLS Capital, according to the
suit. The bonds were falsely marketed as safe.
HSBC North America Holdings Inc., HSBC USA Inc. and HSBC Bank USA, N.A.
Announces Executive Changes, Effective June 30, 2014

Jun 16, 2014

Patrick (Pat) Burke (52) has been appointed Executive Director of HSBC North America
Holdings Inc., HSBC USA Inc. and HSBC Bank USA, N.A. with effect from 30 June 2014.
Burke succeeds Irene Dorner (59), who will retire after a distinguished 32-year career at HSBC.
Burke was appointed Chief Executive of HSBC Finance Corporation in 2010, assuming
48

responsibility for winding down the legacy Household consumer finance business. Rhydian Cox
(53) has been appointed xecutive Director of HSBC North America Holdings Inc., HSBC USA
Inc., HSBC Bank USA, N.A with effect from 30 June 2014. Cox will report to the Chief
Executive of HSBC US and to Marc Moses, Executive Director and Group Chief Risk Officer.
Cox will chair a new US Remediation Committee which will drive the regulatory remediation of
high-risk items, including significant control items. Cox was appointed Chief Risk Officer, AsiaPacific in 2008. He joined the Group in 1984 and was appointed a Group General Manager in
2013.
HSBC Bank USA NA Appoints Thomas Hou as Managing Director of Debt Finance
Origination for U.S. Commercial Bank
May 9, 2014

HSBC Bank USA NA appointed Thomas Hou managing director of debt finance origination for
the U.S. Commercial Bank. Hou will be responsible for helping the company's commercial
banking clients access bank financing. He will work with Andy Smith, head of debt finance
origination for the U.S. Commercial Bank. Both report to Martin Brown, executive vice
president and head of large corporate banking. Hou joins from Barclays Plc, where he served as a
managing director with the high-grade loan syndicate.

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HSBC GROUP MEMBERS

Personal and Commercial Banking
HSBC Bank Brazil S.A. - Banco Multiple
Hang Seng Bank Limited
HSBC Bank Canada
The Hongkong and Shanghai Banking Corporation Limited
HSBC Bank Argentina S.A.
HSBC Bank Australia Limited
HSBC Bank Malaysia Berhad
HSBC Bank Middle East Limited
HSBC Finance Corporation
HSBC Bank USA N.A.
HSBC Bank plc
HSBC Mxico, S.A., Institution de Banca Multiple, Group Financiers HSBC
First direct (division of HSBC Bank plc)
HSBC France
HSBC Bank Malta plc
HSBC Bank Egypt S.A.E.
The Saudi British Bank (associate HSBC Group)
Global Banking and Markets
Global Banking and Markets
ASSET MANAGEMENT
HSBC Global Asset Management
HSBC Trinkaus & Burkhardt AG

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Private Banking and Trustee Services

HSBC Bank Middle East
HSBC Private Bank
HSBC Trinkaus & Burkhardt AG
HSBC Trust Company (UK) Limited
SECURITIES
HSBC Trinkaus & Burkhardt AG
HSBC Broking Services (Asia) Limited
HSBC Casa de Bolsa, S.A. de C.V., Group Financier HSBC
FINANCE
HSBC Asset Finance (UK) Limited
HSBC Invoice Finance (UK) Limited
HSBC Vehicle Finance (UK) Limited
HSBC International Trade Finance Limited
Wayfoong Credit Limited
Wayfoong Finance Limited
HSBC Fianzas, S.A., Group Financier HSBC (financing bonds)
Insurance, Retirement Benefits, Actuarial and Personal Financial Services
Hang Seng Insurance Company Limited
Hang Seng Life Limited
HSBC Insurance Holdings Limited
HSBC Bank plc
HSBC Life (UK) Limited
HSBC Seguros, S.A. de C.V., Group Financier HSBC (insurance)
HSBC Pensions, S.A. (pensions)
HSBC Insurance (Asia-Pacific) Holdings Limited

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CONCLUSION
As long as the wider economic situation remains doubtful, it is advisable
for HSBC to adopt a wait-and-see approach - and a careful look at their
businesses, stress testing them for both economic downturn and full-blown
recession. And it would be useful to factor in the wider commercial and
operational impacts through combined risk, valuation, economics, operations
and HR teams. Certainly, for financial services firms like HSBC, crisis
management still necessary in the form of asset and portfolio revaluation on a
mark-to model basis for both management and constitutional accounting
purposes - and this may need some independent validation.

Within the last decade the best consumer bank HSBC garnered awards
along with soaring rankings. This was just one of those awards won by the
HSBC in its excellent performance. Such achievements, rankings, and awards
can be directly resulting from HSBC's business strategies. As the last
decade's success is not ever lasting due to increased competition in the
industry facilitated by globalization, trade liberalization rather is become more
difficult for the corporation to maintain its leading position through offering the
excellence in the service. The company needs to add diverse values to its
strategy to establish its position in the target segment.

HSBC may check policies, procedures and availability of skilled people

to respond quickly and effectively to serious market volatility or disruption to
stem losses (or even make profits). It may also review the adequacy of: Limit
framework; reporting framework; Stress-testing procedures.
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HSBC needs to play their pricing strategies very carefully; as it has

generated many hundreds of millions of pounds per annum in revenue from
these charges. Review operational capability to handle the situation, with
particular focus on: effectiveness of the process, infrastructure along with
functional capacity (front, middle, back office) and straight through
process/workflow evaluation.

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BIBLIOGRAPHY
BOOKS
KOTLER PHILIP : Marketing in New Millenium, Millenium Edition Prentince Hall Of
India, New Delhi
C.R. Kothari : Research Methology; Wishva Publication, New Delhi.
M.J Methew : Risk & Insurance Management.

MAZAGINES

Business World
Invest One
Business Today
Invest Time By TATA-AIG
Fund Fact Sheets Of Reliance Mutul Fund
Offer Documents Of Different Schemes

WEBSITES
http://en.wikipedia.org
www.hsbc.com

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