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

• 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

• HSBC was voted ‘Global Bank of the Year - 2004’

by The Banker magazine for an unprecedented third

consecutive year

• HSBC was named the ‘World’s Best Bank - 2004’

in Euromoney magazine’s Annual Awards for

Excellence

• 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

Factors for Success

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

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.

A pioneer in computerisation

and product innovation

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.

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

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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

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.

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The company launched its Asset Management

Company (AMC) in December 2002 and has been

able to achieve one of the highest growths in assets

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.

The HSBC group has got into insurance distribution

through both the corporate agency as well as through

the insurance broking channel. For life insurance, it has

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

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

indicated its willingness to invest in other financial

sector businesses such as insurance and pensions

should local regulations permit.

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

and increasing volumes in the securities market owing

to the large number of initial public offers and mergers

and acquisitions, HSBC is planning to ramp up its

presence in India.

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