HSBC Should Be A Core Bank Holding

Mar. 13, 2013 4:05 PM ETHSBC Holdings plc (HSBC)12 Comments
George Fisher profile picture
George Fisher

HSBC Holdings Corp (HBC) is one of the largest global banks with substantial operations in all major regions. Founded in 1865 and formally known as Hong Kong and Shanghai Bank Corp, HBC services about 60 million retail customers from 6900 offices in 85 countries. Just prior to the expiration of the 99-year lease of Hong Kong and the "Handover" by Britain to China in 1997, HBC moved its headquarters from Hong Kong to London, and the domicile country changed to the UK. HBC ADRs trade on the NYSE with a ratio of one ADR equals five shares traded on the London Exchange.

HBC is organized using the following six geographical regions and each region's percentage of 2011 pretax profits and assets:

Asia-Pacific Ex-Hong Kong - 34.2% of profits and 12% of assets

Hong Kong - 26.6% of profits and 18% of assets

Europe - 21.4% of profits and 47% of assets

Latin America - 10.6% of profits and 4% of assets

Middle East - 6.8% of profits and 2% of assets

North America - 0.5% of profits and 17% of assets

In each region, clients are categorized into the following four segments and each segment's percentage of 2011 pretax profits: Commercial Banking 36%, Global Banking and Markets 32%, Retail Bank & Wealth Management 20%, Global Private Banking 4%.

HBC has historically been focused on the Asian markets as their strength. However in the 80s and 90s management desired to expand its footprint, going on an acquisition spree in Europe and the US. One ill-fated acquisition was HBC's purchase of Household Finance in 2002. During the financial crisis, Household Finance became a real problem with its sub-prime mortgage exposure. Late in 2007, management announced a multi-year restructuring to return to the company's strength - Asia and developing countries.

In 2011, management offered

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George Fisher profile picture
I am the author of Guiding Mast Investments monthly newsletter, focused on timely dividend paying stocks. Our mission at Guiding Mast Investments is to help investors keep a steady pace of wealth accumulation as they navigate through their financial voyage.  I have been a Registered Investment Advisor, financial author, and entrepreneur. I bring a variety of expertise to my clients, from personal investment planning and management to stock market analysis skills. I am the creator of the late 1990s investment newsletter Power Investing with DRIPs focused on timely selections of dividend paying stocks. I have also published two books through McGraw Hill, All About DRIPs and DSPs (2001), and The StreetSmart Guide to Overlooked Stocks (2002). My work experience covers a variety of fields.Prior to being a RIA, I spent 15 years as a corporate manager at Georgia-Pacific Corp before venturing out on my own, operating several businesses from manufacturing to export marketing management. President Ronald Reagan appointed me to the National Advisory Council overseeing the Small Business Administration from 1988 to 1991. Now comes the obligatory disclaimers: The opinions and any recommendations expressed in this commentary are those of the author . None of the information or opinions expressed in this article constitutes a solicitation for the purchase or sale of any security or other instrument. Nothing in this commentary constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any purchase or sale activity in any securities or other instrument should be based upon your own analysis and conclusions. Past performance is not indicative of future results. The information contained in this report does not purport to be a complete description of the securities market, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Expressions of opinion are as of this date and subject to change without notice. Either Mr. Fisher or his employer, if any, may hold or control long or short positions in the securities or instruments mentioned.

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