HSBC Bangladesh
HSBC Bangladesh is a foreign bank that operates within Bangladesh that began operating in
1996. It is a subsidiary of the HSBC Group, a UK based international financial conglomerate that
operates in the Americas, the Asia Pacific region, Europe, the Middle East and Africa. Within
Bangladesh it has 13 offices and 39 ATMs catering to retail banking, commercial and
international banking. Its retail banking deposit product line includes current accounts, savings
accounts, education savings plans, interest bearing time deposits and term deposits.
Entry strategies of HSBC in Bangladesh: The Hong-Kong and Shanghai Banking Corporation
(HSBC) Ltd is a foreign direct investment (FDI) of HSBC Group in Bangladesh.
Key business areas:

Retail Banking and Wealth Management

Commercial Banking

Corporate and Institutional Banking

Global Markets
Contact Details:
HSBC, Bangladesh
Management Office: Level 4, Shanta Western Tower
186 Bir Uttam Mir Shawkat Ali Road
Tejgaon Industrial Area, Dhaka, 1208.
Telephone: 880 2 8814460
Web: www.hsbc.com.bd
“PESTEL” analysis on HSBC in Bangladesh
Any business organization operates within the context of an environment. The environment of a
business organization impacts and influences the business operation in a number of ways. That is
why an analysis of the environment is a very essential component of any business organization
and at any level of its business life cycle. The environment of an organization is categorized into
two main environments: Internal and External
environment. External environment consists of
the “PESTEL” factors- Political, Economical, Social/cultural, Technological, Environmental and
Legal factors. Now we discuss about how HCBC in Bangladesh affected by these factors:
Political factor: The political instability that the country has suffered throughout history and still
has not only affected the general conditions of Bangladesh but also the foreign investors and
multinational countries. Though HSBC is a foreign bank and the reporting line is in Middle East
and London but the political conditions in the country affects its activities to quite an extent as
ultimately the Central bank of Bangladesh supervises all the activities of all local and foreign
banks. As a result of the political instability, the international investors hesitate keeping their
money as they are afraid of frauds (e.g. recent corruption activities in SONALI Bank which is
nationalized bank) and the culture of Bangladesh as it is popular for its bad and unorganized
trends. Also other political violence’s such as “HORTAAL” also hampers HSBC banking
activity.
Economical factor: Since the world economy is moving towards a recession, so Bangladesh is
no exception to the economic instability and uncertainty and HSBC has to operate within such
economic environment. The money supply and the aggregate demand of the economy are great
influences that affect the banking sector. In Bangladesh national savings rose only slightly,
indicating the slow growth in bank deposits and is low by International standards. The causes of
low savings have been the low per capita income, high dependency ratio, urbanization, lack of
proper infrastructure in rural areas and inflation leading to rise in prices. Inflation is high due to
high food prices which offset the demand management policies. As a result of high inflation,
poverty is high and the productive capacity is stressed. Hence, HSBC is affected by all this facts
related to Bangladesh economy as it is perform its business in this country.
Social factor: Since the rise in prices, the general public has become conscious towards their
spending and is facing a decrease in their disposable income. They are saving less and as a result
the growth in the bank deposits has slowed down. Due to the political, economical and law &
order situation being very uncertain, there is lack of trust found in the people of Bangladesh on
the financial institutions. Another aspect that adds to it is that people are less educated and
unaware of how system works so rumors create great panic that result in problems in financial
sector, hence affects HSBC also.
Technological factor: With the advancement in technology and the increase of its usage, it has
created many opportunities to all kinds of industries. There are now automated teller machines
that have replace the conventional tellers, the whole banking systems have been automated
assuring transparency in the system as a result of which the trust of the consumer has been
gained. The internet technology has provided new avenues to work as online banking system is a
common phenomenon in the west and is gaining popularity in Bangladesh too. Many mobile and
telecom companies are collaborating with the bank to reach out to the customers even more
efficiently and conveniently. This has raised the level of the competition thus raising the
pressures to compete in unique ways to add value.
Environmental factor: Several environmental adverse conditions such as natural disaster and
the probability of hurricanes, floods, earthquakes, tsunami etc. make it riskier for HSBC to invest
in some areas of Bangladesh.
Legal factor: The instability of the legal system and lack of freedom of the judiciary has
impaired the growth of the economy as investments have slowed down. The law and order
situation has become from bad to worse. The potential foreign investors have backed out and
those who have already invested face threats and insecurity. The recent past is filled with the
bomb blasts and attacks on foreigners and since HSBC is a foreign bank, it too has been
threatened and still faces fears.
Porter’s Five Forces model analysis on HSBC in Bangladesh
Porter’s five forces, also known as P5F was created by Michael E. Porter in 1979, is a way of
examining the attractiveness of an industry. It does so by looking at five forces which act on that
industry. These forces are determinants of that industry’s profitability. The five forces are:
An analysis of Porter’s Five Forces model on HSBC Bangladesh as follows:
1. Threat of new entrants: Advances in information technology have significantly reduced the
barriers to entry in the banking industry. Due to the adoption of Internet banking, distribution
channels are now not limited to traditional branch networks. Prospective customers all over the
world could access the internet and search for banks offering the highest interest rates or services
with the best features. Furthermore, new banks will also be able to compete by using IT to
reduce their cost and extend their distribution channels. Another factor that lowers the barrier to
entry would be the low switching cost, for example, the transfer of credit card balances from one
bank to another.
2. Bargaining power of buyer/customers: Bargaining power of customers is relatively high, as
switching costs are low for customers to leave HSBC and gain banking services from other
banks. Foreign banks like Standard Chartered Bank, The Woori Bank Ltd., Bank of Ceylon etc.
have entered the market and thus add to the local banks thus serving as the current competitors.
3. Threat of substitutes: In terms of threat of substitutes, the banking industry faces an
increasing number of substitutes even though deregulation has brought massive mergers and
acquisition. This is mainly because of the ability of modern telecommunications to eliminate
distance that often hindered foreign banks with no branch networks in local markets. Although
there are not many substitutes available. The government has not been able to come up with any
innovative saving schemes to attract the general public, therefore reducing the threat to of the
substitutes to the banking industry.
4. Bargaining power of suppliers/depositors: Generally, IT has increased the bargaining power
of depositors. The emergence of telebanking and online banking has empowered depositors.
Depositors can quickly use the internet to determine which bank is offering the highest interest
rate and deposit their money there, while consumers do the opposite (lowest interest rate) in
searching for loans. Therefore, price sensitivity in the industry has increased together with the
number of substitutes available for depositors.
5. Competitive rivalry: Foreign and local banks now tend to compete more directly with one
another over the same group of consumers. Foreign banks are the direct competitors of HSBC
that are striving for the same market share and customers. In addition, local banks have a longterm trust relationship with their customers, which still provide them an edge. The local banks
are fast to imitate and since the banking system is a very transparent one, imitation is easy, thus
increasing the fight between the competitors. They are trying to capture the upper middle and the
middle-middle class segment that are currently the customers of the multinational banks. With
their relatively low interest rates charged to the customers and higher interest payback rates
compare to HSBC, they are strong threats as they have extremely lowered the switching costs to
the customers.
Conclusion:
This study has been completed in term of researching the position, business strategy, business
operations, as well as competitive advantage of HSBC. Two models including PESTLE analysis,
Porter’s five force model have been used to evaluate and examine the competitive position of
HSBC against its competitors. Marketing strategy has been analyzed to show HSBC’s reactions
to cross-cultural issues, and CSR of HSBC is also considered. The main conclusions can be
drawn as follows:
1. HSBC has become the world’s local bank, regarded as the largest bank in terms of market value,
the second largest bank in terms of sales, and the fourth largest bank in terms of assets.
2. HSBC has the most international presence, especially with four main markets such as the United
Kingdom, Hong Kong, the United States, and France.
3. HSBC could provide its customers a diverse range of financial products and services through
four global business groups including Retail Banking and Wealth Management; Commercial
Banking; Global Banking and Markets; and Global Private Banking.
4. HSBC’s competitive advantages against its competitors lie in the diversity and differentiation of
financial services. Moreover, the recovery of global economy, the opportunities of doing joint
ventures and M&A, and the emerging of China and the third world also help HSBC boost its
advantageous competition in finding potential markets and customers.
References:
 www.hsbc.com.bd
 www.ukessays.com
 www.wikipedia.com