The Hong Kong and Shanghai Banking Corporation - Assignment Example

ASPECTS OF INTERNATIONAL ACCOUNTING & FINANCE Reseacrh analysis Introduction to the HSBC (The Hong kong and Shanghai Banking Corporation): HSBC is a private Limited company that is established in wales and England. Its headquater is in London. It is the largest group of banking system of world and also it takes the pride to be the largest company of the world. HSBC is one among few International banks that do not require and accept any inusion in capital or any other Government bailout. HSBC is a short form of The Hongkong and Shanghai Banking Corporation. Hong Kong is one of the great and important source of finances for the HSBC, there is not any country that dominates such income. Now HSBC has also its root in China. HSBC group is the largest banking group of Europe that has a vast and deep rooted operational foundations in Asia. It is offering enormous lending services, investment services, and insurance services all over the world. The HSBC company has maintained a global reach and has entertained with all of the financial fundamentals which are included by many banks and financial multinationals in their operations. HSBC group of banking is also listed on Hong Kong, New York and London Stock Exchanges. It is also a great part of Hang Seng Index and FTSE 100 Index. HSBC banking group is the leading and most broadly signify as an international bank of the Middle East. The great research on HSBC demonstrates that the largest banking group of the world, HSBC bank is doing exceptional in the banking industry. It is doing well in all of its services whether they are of pricing, convenience and confidence. There are many pie charts and tables that represent the detailed fame and operational reputation of HSBC banking group. An explanatory examination in the study encompasses the results as following: An opinion poll was planned and was presented to targeted 25 customers who are using the services of HSBC and also account holders of HSBC bank. While answering the question to the customers related to that why they prefer HSBC bank from account opening? About 19% of them told that it is most famous and has good reputation that is why they have chosen it, about 18% considered that it has great stability 17% of the customers told that it is reliable and they can depend on services and are entertained with quality services and product. On the question of excellence of services about 72% customers told that are contented with the services and operations. About 28% customers were satisfied with the services and the quality in operations. So we can bring about that the bank is performing well and offering outshine services as compared to other banks in the banking Industry. As far as my opinion is concerned, I believe that this bank is customer oriented and customer satisfaction is the top priority of them. They offer quality in their services and hence they satisfy their customers. So What is more, HSBC bank considers that it has gained such reputation and fame just because of its friendly and open environment that customer exercise in their banking system. Furthermore it also demonstrates that about 8% of customers are there who are not satisfied with the transaction as they system takes time in dealing its customers. They told further that their money and cash management system must work actively and perform outshine efficiency. The management of HSBC bank must take a look at and must plan the quality in service. Additionally, a great data from the customer shows that they are very fulfilled with the ATM services of the HSBC bank. Further this research shows that about 32% are now very happy with the services and about 48% of customers are also there who were very pleased with the ATM services but now they are not. The research also shows that they do outshine in their ATM network system. Besides these factors, I add that this fame is possible just because of efficient system and effectiveness in the operations that has been incorporated within a bank branch to develop an environment that is not only suitable and comfortable in navigation but also encourages the customers to execute business with the HSBC bank. QUESTION 2: Acquisitions of HSBC: Banking acquisitions and mergers also written as M&As in abbreviated form, come up to seen and fortunately in the present days they are again has become the top priority of many strategic policies of corporate. This standpoint looks at the shifting landscape of environment of retail banking of these days and is concerned about various mergers and acquisitions choices. In this segment the main purpose is to devote a context for the strategic options that are faced by clients today, explain certain drawbacks to evade, and outline the channels found so far. Following are the most important acquisition of the HSBC global bank from a leading magazine – The banker. Magazine-The Banker: The magazine The Banker has nominated HSBC Banking group second time because of its string and efficient services. The magazine said that “another strong financial performance and far-sighted acquisitions”. In 9th September, 2003, there was an award ceremony in London. HSBC banking group was awarded seven times at this ceremony. It also received a global award as the HSBC bank was nominated the Asia-Pacific and Best Bank of the year also the most excellent bank of Hong Kong for two years. It also received many award of being a Best Bank of the world Philippines, Armenia, Egypt and Malta. This Strategic attainment by HSBC, especially in US the Household International and developments in services of investment banking was just the reward of the profound efforts and effective decision by bankers that it won the reward of being the best and largest bank of world for the year. “HSBC took a major (and good value) step forward in its aim of becoming the world’s leading financial services organization. It bought US consumer finance and cards group Household International at only 1.7 times book value,” the magazine said. “This acquisition fulfilled a number of goals including cutting the group’s cost-income ratio, spearheading its moves into other markets and giving it the US exposure it had been looking for.” GF Bital was acquisition in Mexico and was known as a best strategic match with Household. “Together, they can target the Mexican-US remittances market and the large immigrant Mexican population in the US.” The acquisition of a 10% stake in China’s third largest insurer, Ping An was, said the magazine, “typical of HSBC - a bold move at a good price, but without too much risk.” According to context in the magazine “major improvements to [HSBC’s] investment banking business” that was observed the banking Group as “climbing up the mergers and acquisitions league tables to join the top 10”. Mr. John Bond who is the chairman of the group said: “We are delighted to have won this award for the second year running. We hope it reflects the continued progress that HSBC has made during the last 12 months. It is a tribute to my talented and hard-working colleagues. Above all, perhaps, it is recognition of the loyalty and support of almost 100 million customers whom we serve worldwide. We never forget that our success depends on their success.” Environmental Report: It is evident that senior management is involved in CSR management of HSBC global bank. In the year of 2003, Corporate Social Responsibility Committee of HSBC, which is one among the five committees of the largest bank HSBC was set up to administer the social policies and strategy of corporate. Three non executive persons are responsible to manage and handle this Committee. The present year of reporting is as a result the first benefited by HSBC global bank from the oversight of the Committee members. The committee sets up a meeting quarterly in the year and this is standard meeting time. This committee was coordinated by CSR executives of CSR committee. CSR committee member reported to the CSR executive. The meeting was held to characterize major areas of the corporate that has considerable influence on CSR performance, such as compliance, human resources, risk and credit, acquisitions of the bank and secretarial activities of the company. The coordination of all the communication whether they are internal or external is the responsibility of corporate affairs department of HSBC global bank. There are many provincial groups that have been developed in many regional areas such as Brazil, France, Middle East and Hong Kong. On the other hand, the report shows a minor meaning of CSR issues and how these issues should incorporate in the management policy of the business, its various divisions and more particularly in most important business markets and the areas that are more sensitive to risk. The report has a great pitfall in sense that it does not provide any further coordination and communication pattern for the CSR network which was off course very much significant to discuss as this is necessary to promote knowledge that known collectively and experiences to each other for making sure that the goals are attained and the performance is monitored well. There are five most important business principle that are defined by HSBC group, none of them submits clearly all the responsibilities such as ethical, environmental and social responsibilities of corporate. On the other hand, this is admitted that in the coming reporting of future, it would be a great and intense concern to connect the responsibilities and routine tasks of bank with its core business principles. There is also a great interest of HSBC bank that it has committed to itself to widespread the range of major codes for conduct, such as the UN Global Compact, the Equator Principles, UN Universal Declaration of Human Rights, the UN Environment Program Finance Initiative, Wolfsberg Principles, the OECD Guidelines for Multinational Enterprises and the Global Sullivan Principles. HSBC has also it profound and active participation in the Carbon Disclosure Project, the Global Business Coalition on HIV/AIDS and the Climate Change Group, the Extractive Industries Transparency Initiative. Issues that were discussed in the Report: There are two major sections of the main body of the report. First part represents the impact of financial services of HSBC with the management system of HSBC global bank, also it represents all the issues related to lending practices of the bank whether it lends to individual or a group for a big project. It also presents the awareness of customers and their protection on financial issues of the bank. The other segment is concerned with the effect and influence of operations on HSBC management and this segment is devoted to employees, company environment, supply chain and corporate community. This report also presents the major issues of the employees, environment and corporate society, financial issues and various project finances. Finance Project: Plan: HSBC admits that although the banking industry is working dedicatedly to reduce the risks that are involved in financial practices but risk of sustainability is still new and in seen frequently. Even HSBC is putting effort to reduce this risk and has established some key guidelines in its operations to reduce the risk. More significantly HSBC global bank has agreed to the Principles of Equator written as EP in short form that is a combination of nine (9) principles to resolve all of the issue that come on way while dealing with financial projects. These issues are social and environmental issues. So on resolving these issues, HSBC has agreed on a point that is to perform an assessment and analysis of social and environmental issues on the financial projects, relationship of social and environmental issues with the failed projects and to assess the capacity of borrower to manage its sustainability. Agenda: HSBC got succeed in establishing a chain of sustainable risk strategy on the industries that have a sound social and environmental impact. The first guideline that was set by HSBC was the forest land sector and forest manufacturing industry. The guideline shows the intelligent approach to sustain the risks faced by the management of HSBC global bank. The establishment of this strategy in the forest industry is a significant step toward the risk management that is associated to the social and environmental factors. It is great evidence that is demonstrated below to prove the success of this strategy into the business sector and this guideline has integrated the business industries very well. Such as according to a business dealing in Asia, a forestry workshop was provided to Asia and many workshops will be delivered very soon in many other regions in the 2005. It is clearly seen that HSBC has demonstrates a clear and transparent commitment to its Equator principle practices. In the 2004, the bank conducted training on the equator principles in which about 15 managers and about 24 executives were provided the training regarding the equator principle and its applications. This dedication of HSBC clearly demonstrates its purity and transparency in commitment. This plan of training was then extended by HSBC management in 2005. HSBC also founded the system to alter the company’s procedures that are followed for a ranking various projects, and also its standard policy was amended in its documentation of project loan in order to set up a plan that is fully in accordance to management plans of Environmental factors. Moreover, HSBC global bank is the among several banks that has put the Equator Principles in its strategy and have incorporated an effective system that puts the application and techniques of Equator Principles in the projects that are ranked as lower then $50 million. In fact it is not as that if the size of loan is small then there is less risk involved in the project. Even it is very clearly seen that the loan size is small but the project can still be very damaging and risky. HSBC takes pride to incorporate the Equator Principles in its project advice giving services, in corporate lending, in bonding services and in securities that eventually support the projects. Execution of plans: HSBC has provided a chart of Equator Principles in its daily services such as category of facility, type of facility and size of deal. This decision by HSBC shows its more sound dedication toward its commitment. This chart demonstrates the total number of approved and un approved projects in the year of 2004. There are 46 transactions that have an amount of $3,528 million and were approved by HSBC, and also 12 transactions are that do not have compliance and conformity with the principles of Equator. Financial Services of HSBC: This planning is concerned with the provision of financial services to whom that have less income or have any kind of disability. Such people should be treated extraordinarily and they should be compensated by the HSBC. These people must have a different strategy than all of others. This plan of providing the financial services includes the provision of financial services in relatively small amounts, such as small loans, travel and life insurance, savings accounts and many other facilities. Many developing countries encourage their employees to involve in self earning project and give them loans to manage their small business. Plan: According to HSBC management it is very much important to provide such social compensation to the members of society to raise their moral. This provision will not only help them in managing their finances also they will be independent and they do not need to ask some one for their needs. But unfortunately the HSBC is failed to set a policy in this regard. Agenda: HSBC has recognized its incomplete effort in this regard. So it has planned a pilot project of six month in different regions of the world such as India, Philippine and Brazil in 2004. HSBC aims to consider more policies to develop and encourage these services in this sector through its pilot plan. Execution of plans: Very soon HSBC is planning to provide the financial services to such people. However this planning is still just on papers and there is not any implementations observed in this regard so far. Diversity of Employees: This section of report regarding the diversity of employees include that with the number of 253,000 employees who belong to 77 countries, this diversity has its sound impact on the HSBC policies and operational system. This segment of report is about the employees from different regions and all other issues regarding their safety, health, knowledge, education, social and career development, employees’ coordination and provision of recourses to the employees. Plan: There are long and effective plans for the human resources that are included in the HSBC strategy list of human resources. This plan is about managing the development and growth of human resources but there are many policies that have set up for HIV/ AIDS locally. These initiatives are not common and same through out the world rather these plans have their roots locally. HSBC is cooperatively working for the growth and development of its employee. HSBC does not differentiate its employees on gender bases, religion, ethical faiths, race, disability; rather it has a broad definition of globalization that refers to setting a team that is open mind, comfortable and likes to work in coordination. HSBC has set up its own policies to handle with diversity. This toolkit is provided to all the managers on the Intranet of the company so that manager could take direction from them while handling a real situation from any part of the world. How ever still this aspect is unclear that whether all of the divisions must set up their policies to handle and manage the diversity. Agenda: HSBC conducted a survey internationally to identify the issues related to gender and to resolve all the problem of senior executive which they face dealing with gender diversity. HSBC got a resolution from the survey such as 70% of management considered that there is no difference between men and women rather they are enjoying equal opportunities. About 34% of women who were at senior positions agreed to this. So it is evident that there is a need for significant improvement in the system and also this observation is the sign of growth, particularly to the development of the senior women members of the organization. Execution of plans: HSBC entertains statistical data of last two years on age and gender, and also the ethical faith of its employees from different regions. The statistics shows that the male and female ratio for the employees who are working on the top level posts is equal. About 70% of the employees fall under the group having age of 25 to 45 years. Ethnic background statistics shows that while employees are about 88% in UK and 63% in US. Also 96% are Asian in Asia-Pacific; all other employees from the Brazil are the Americans. Working Atmosphere: HSBC has a faith that about 9,800 offices of its all over the world have a sound impact on environment. Plan: However the change environment has invited the attention of managers of HSBC. Carbon Disclosure Project is a UK government organization for funding. HSBC is a member of this organization. This organization is concerned with the disclosure of investment and funding related issue of corporate. Agenda: HSBC has planned to establish a system for the environment management in the 2004. This management system is founded on the content of ISO140001 and hired a new team for the environment management of the corporate. In the coming reports, HSBC will also present a discussion on the management and further core policies of handling this sector. Execution of plans: HSBC is working greatly on development and progress of its environment. Maintaining the sustainability of its environment is a great challenge for the HSBC and HSBC is working deliberately in this regard. Corporate society: Plan: HSBC aims to direct about 75% of people and entertain them with quality education and social environment. There is figure for community donation in the report that shows the half of the donation do not fall in this area. So this clearly shows the room for betterment in this field and by understanding its limited efforts in the field of community, HSBC will practice a strong image and position of corporate to the employees. HSBC must seek feedback from the employees on the issue of community plans and employee satisfaction. HSBC must conduct a survey to map the employee satisfaction toward the job. Agenda: There is more centralized and integrated strategy is being adopted by HSBC for the resolution of this issue. This approach makes the management comfortable in monitoring the activities of corporate and it helps in making a sense of organization and its direction. Considerably, the bank has developed a data base for the donation on the international level in 2004 which about 24 countries use and it is hope that the data base is helping them in managing external and internal issues of this sector. Execution of Plan: Statistics that are drawn in the report mention that HSBC has allocated the amount of $69.2 million for the community donations in 2004 that also includes $7.2 million that has a worth of 237,000 working hours of employee. HSBC believes that this new donations database on international level will not only assist in progress of this system but also external image of the corporate will be improved. QUESTION 3: Assessment of Annual report of HSBC: In the final report of 2006, HSBC has clearly stated that they have an obvious strategy for Managing the Growth, It has outlined its vision to be a leading and largest company of world which serves in managing finances. It is apparent from the strategic study of the HSBC that it gives priority to its customers and employees of the company. HSBC management says that they are the best and are at the top of the world that is providing quality and less risky financial services. HSBC has maintained sustainability in the corporate environment. It is the best choice for its customers, its colleagues, its shareholders and also its society. To achieve this task management have laid the foundation of the corporate on the seven principles which they say global pillars that define the actions that are to be taken while dealing with financial services. Following is the detail of those seven pillars: Quality services to Customers: HSBC considers that its Customers are its future and the foundation on which it takes stand. It is continuously improving its services to get a higher ratio of customer satisfaction through its values financial services. It has worked deliberately to let the customers realize that HSBC is a best place for business. To be a global bank: HSBC has clearly stated that it wants to be on the top of the world and wants its recognition as the largest financial services provider. It has established its services in 82 countries and it wants to manage sustainability in its services regardless of its geographical branches. It has uniformity in its services for all customers equally. Culture of HSBC: HSBC is the most leading and largest financial services dealing company of the world. It is working considerably to earn respect and fame of being a customer-driven company and it has recognized the factor of employees’ motivation and involvement in the tasks to increases the productivity of employees and performance of the company. Global Services: HSBC has a done a great deal of being a global bank to gain all the competitive advantages. It takes pride to entertain its customers with matchless services on international level. Managing its sustainable growth: HSBC has prioritized the capital allocation to guarantee a maximum return to shareholders for the long term. It has established its business especially in mature markets. Technology and integration of processes: HSBC uses innovative and advanced technology to channel its resources and makes easier for its customers to commit a business deal with it. It has maintained the efficiency in its operations and has simplified its processes. The organization: HSBC has owed responsibility to delivery of its goals and objectives to all the managers of a country including all the senior executive of the bank and is guiding them where they feel problem and get stuck in managing and delegation of the authority. References ELLIOT J.,(2006) FINANCE ACOUNTING,REPORTING AND ANALYSIS,ANTERNATIONAL EDITION,2nd EDITION,P.78 Read More