Hsbc

HSBC Background The Hong Kong and Shanghai Banking Corporation’s (HSBC) association with the banking industry in India goes back about 150 years and is nearly as old as the history of banking in the country. The association commenced in 1853, when the Mercantile Bank of India, China and London was established in Mumbai, with its headquarters in London. The Mercantile Bank was taken over by the HSBC Group in 1959. The HSBC Group has so far invested US$ 590 million in India and employed about 3,150 people as on March 31, 2004. In 2003-04, the bank had assets of about US$ 5.51 billion. HSBC in India has product offerings across the banking spectrum, in product segments including retail liabilities and assets, corporate banking, treasury operations and investment banking.

India’s Leading Foreign Bank The profits of HSBC India have shown a broadly increasing trend. At 14.5 per cent (as on March 31, 2004), the capital adequacy ratio of HSBC was one of the highest in the Indian Banking Industry. The three largest foreign banks accounted for about 65 per cent of the total assets of all foreign banks in India as of March 2003. With a market share of 18 per cent (among foreign banks), HSBC is the third largest foreign bank in India.

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Awards & Recognition

• HSBC was voted ‘Global Bank of the Year - 2004’ by The Banker magazine for an unprecedented third consecutive year

ten leading Indian companies and eight of the ten largest multinational corporations in India, providing the full range of corporate banking services to these customers. HSBC has leveraged upon its global experience to innovate products and services to suit local requirements. Maintaining long term relationships and constant product innovation have been key factors contributing to the success of HSBC in India.

• HSBC was named the ‘World’s Best Bank - 2004’ in Euromoney magazine’s Annual Awards for Excellence

A pioneer in computerisation and product innovation

• Finance Asia has named HSBC the Best Foreign Commercial Bank in India for five years in a row, i.e. 2000, 2001, 2002, 2003 and 2004

Factors for Success

HSBC in India has retained the HSBC Group’s pioneering spirit by being an active partner in the development of the Indian banking industry. The bank launched the first ATM in India way back in 1987. The bank was also one of the first banks in India to achieve an electronic banking customer interface and this has helped it generate higher than market growth rates for the Trade Services business.

HSBC has established strong businesses in all key areas of commercial banking. In Corporate Banking, HSBC has effective long-term relationships with seven of the

Cashing in on the falling interest rate scenario in the country, HSBC was one of the first banks to start the innovative product offering - floating interest rate home

• An Outlook Money Survey has ranked HSBC India No. 1 in Service Quality and Branch Facilities for 2004 • A Business Today - KPMG Survey named HSBC India the Safest Bank in 2003

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loans. The home loans segment has grown at a CAGR of 32 per cent over the last 5 years. Currently, almost 75 per cent of incremental home loans are disbursed at floating rates.

Strong retail focus with excellent CRM processes Anticipating a retail banking boom in India the bank acquired the Non-Fund activities from Gujarat Lease Financing Ltd. in 1999. In the year 2000, the bank acquired the Chandigarh branch licence from Deutsche Bank. In 2002, HSBC acquired retail banking business from BNP Paribas and the Retail Banking Operations in Kolkata from Bank of Tokyo-Mitsubishi. Currently HSBC has 37 branches across 18 cities. A relatively late entrant into the booming retail segments of asset management and home loans in India, HSBC has become more aggressive as indicated by the growth of its retail assets in the last fiscal year from around a fourth to a third of its total assets. In line with its retail focus, Credit Cards have been identified as a key growth area. HSBC is the fifth

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largest issuer of credit cards in the country and a leading market acquirer. As a customer relationship management exercise, HSBC has started Premier for individuals and BusinessVantage for businesses. These are premium services designed to look after customers’ business and personal needs including wealth management solutions and personalised banking. The customer gets the service of an exclusive Relationship Manager dedicated to his/her needs. HSBC also offers its local expertise and global reach in handling customers’ trade businesses, including a complete range of services that facilitates him / her in export and import.

Emerging as a complete financial services solution provider HSBC, in India, has positioned itself as a complete financial services solution provider. It has expanded its customer base by extending its product range to include a wide variety of investment products. It has established a reputation in India of being a provider of international quality investment products and services.

The company launched its Asset Management

indicated its willingness to invest in other financial

Company (AMC) in December 2002 and has been

sector businesses such as insurance and pensions

able to achieve one of the highest growths in assets

should local regulations permit.

under management in India. The company had assets under management of over US$ 1.2 billion as on August 31, 2004. The number of accounts has risen to over 150,000 in less than 2 years of launching the AMC.

HSBC plans to expand its capital market, corporate and investment banking teams in India. The bank intends to set up a global analytical support team to help the group in its research in investment banking globally. To take full advantage of the boomimg equity markets

The HSBC group has got into insurance distribution

and increasing volumes in the securities market owing

through both the corporate agency as well as through

to the large number of initial public offers and mergers

the insurance broking channel. For life insurance, it has

and acquisitions, HSBC is planning to ramp up its

tied up with Tata AIG. HSBC has also adopted a very

presence in India.

effective cross-selling strategy to sell insurance to its million plus customer base of account and credit card holders.

Leveraging the India Advantage Business Process Outsourcing for international operations In order to maintain its profitability levels, streamline its costs, improve productivity and cut bureaucracy, HSBC Group has started outsourcing its back office transaction processing and software development activities to India. It has launched captive BPO centres at Hyderabad, Bangalore and Vishakapatnam and plans to gradually shift more jobs to these centres. These centres currently have more than 4,000 employees.

Software development To leverage the software expertise available in India, the bank has set up a software development centre in Pune for developing solutions for HSBC Group’s offices worldwide.

Future Plans While HSBC has acquired assets and customers from other departing foreign banks here, it was earlier not keen on buying a minority stake in a local bank. This strategy has changed with HSBC’s acquisition of a 14.62 per cent stake in UTI Bank, an Indian private bank with a substantial retail portfolio. HSBC has

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