Career enhancement Project
Industry Research
Commercial Banking
Investment Banking
Group Member
Zhou Jun, Juice
Kwok Wai Ho, Timmy
Leung Man Ho, Calvin
Hon Kwok Fai, Louis
HSBC
Background
HSBC Group, one that began from HK more than 130 years ago, now has its
headquarter in London and 9,500 offices in 80 countries or territories. Although
its core around the world are domestic commercial banking and financial
services, which means each regional branch fund themselves locally and do
business locally, the Group also delivers international products and services
adapted to local market. The Group includes both commercial banking and
investment banking. Among them, the Hong Kong and Shanghai Banking
Corporation Limited is the Group’s founding member and flagship in the
Asia-Pacific region, as well as the largest bank incorporated in Hong Kong.
What’s more, it’s a typical commercial bank.
HSBC faces to personal as well as business and deals with basic commercial
services. The personal business HSBC provides includes depositary services
like multi-currency savings accounts and integrated accounts; loan service like
mortgage finance, personal credit services, hire purchase and leasing for
motor vehicles. Meanwhile, for the business, HSBC develops other diversified
services. For example, it offers cash management to circulate business
resource, opens special importing/exporting account to facilitate international
business, monitors financing working capital to insure business operation,
plans employee payroll/retirement scheme to protect employees and even
launches premises leasing to help people start a business.
Strategy
However, all the stuff mentioned above is just normal practice for one
commercial bank. There’re more niches adopted by HSBC to make it so
successful. Looking back into the history, the post-war political and economic
changes in the world forced the bank to analyze its strategy for continued
growth in the 1950s. Overall speaking, the bank diversified both its business
and its geographical spread through acquisitions and alliances.
Business Scope
As for the business, HSBC made both improvements and innovations to
defense its position.
Improvement
1. HSBC develops three different plans for specific customer needs. To be
detailed, (1) HSBC Premier provides customers with unsurpassed
personalized service and assists them with their wealth management. No
matter it’s time for catching investment opportunities, making financial plan or
buying a property, HSBC’s Customer Relationship Manager and other experts
are just a call away. (2) PowerVantage is a higher level of financial
management scheme to help customers earn better returns on their life. Its
services are focused on savings, investment, credit and protection needs and
are noted for the idea of “one-stop financial management”. (3) Super Ease is
privileged for offering ease of mind banking solutions. Hence, personal finance
and banking services become more flexible and simple than ever.
2. Apart form their traditional branches and offices, services are now further
distributed through ATM network, Internet banking service, 24-hour phone
banking center, over 20 Mortgage Advice Centers providing customized advice
7 days a week. Hence, HSBC’s world-class service could be approached
anywhere and anytime.
3. Internet banking. Actually, the HSBC Group maintains one of the world’s
largest private data communication networks and has, in recent years, been
reconfiguring its business for the e-age. Its rapidly growing e-commerce
capabilities include the use of the Internet, PC banking over a private network,
interactive TV, and fixed and mobile (including WAP-enabled) telephones.
According to statistics, at the end of March 2003, 514,000 customers were
using online@hsbc.com - HSBC’s Internet banking service.
Innovation
1. HSBC has added some niches other than its commercial role. (1)
Institutional Fund Services. It began to provide a full range of trust, custody
and fund administration services to a wide range of traditional funds, hedge
funds, retirement schemes and institutional clients. It services funds domiciled
in most of the popular offshore jurisdictions. (2) Custody and Clearing. HSBC
has its custody and clearing business operating in 28 markets and is
responsible for the safe keeping of over US$ 250 billion in client assets.
2. HSBC has taken one step forward into investment banking – Merrill Lynch
HSBC. On May 17 2002, HSBC and Merrill Lynch had agreed in principle that
their joint venture company, Merrill Lynch HSBC, would be integrated into the
HSBC Group. Since then, HSBC could provide direct investing and banking to
its global clients. Merrill Lynch HSBC investment portfolio brings simplicity to
the complexity of managing investments. It lets customers buy and sell shares
online in UK and US markets; gives them access toward winning research,
market data and news while trades are settled with funds drawn or paid
through an HSBC Offshore Bank Account.
3. On 10 June 2003, HSBC Asset Management is offering its new “All
Weather Plus Capital Guaranteed Fund”, a 105% return guaranteed fund with
potential returns linked to the absolute price movement of the underlying
stocks over the investment period of 4 years and 11 months through investing
in a basket of global stocks. This will ensure that investors benefit from positive
returns in all market situations - be it up or down. The fund offers investors (1)
absolute returns: a guaranteed return of 5% (2) Increasing income: because of
“profit lock-in” policy, investors would get at least the same or even higher
income than that of the previous income distribution period. (3) Unlimited
upside potential since the upward price return goes directly to the investor. The
Fund's offer period closes on 7 July 2003. The launch price is USD10 per unit.
So, in terms of these innovations, HSBC as a commercial bank is now even
competing with investment banks. It is now seeking expanded authority to offer
real estate and security brokerage services, insurance coverage and
investments in mutual funds.
Geographical Scope
As for the Geographical scope, HSBC has its branch in Australia, Kazakhstan
and Malaysia etc. Especially these days, it’s intended to expand business in
Mainland China.
1. 2000.5, HSBC’s China management office in Shanghai was renamed
HSBC’s General Representative Office Mainland China. The move further
demonstrated the Bank’s long-term commitment to its China Business. Up to
now, HSBC’s network in the Mainland comprises nine branches – in Beijing,
Dalian, Guangzhou, Qingdao, Shanghai, Shenzhen, Tianjin, Wuhan and
Xiamen – a sub-branch in Puxi, Shanghai, and representative offices in
Chengdu and Chongqing. Of its more than 1,000 employees in the Mainland,
over 90% were recruited locally.
2. 2001.12, HSBC became the first foreign commercial bank to acquire an
interest in a domestic mainland bank when it took a minority stake of 8% in the
Bank of Shanghai, and in 2002.10, HSBC acquired a 10% stake in Ping An
Insurance Company of China Limited, setting a historic precedence in China’s
banking reforms.
3. 2002.4, it’s the first time for foreign commercial bank to provide foreign
currency services to mainland Chinese citizens and corporations. This service
(which is the only one that foreign banks are currently allowed to provide to
local citizens and corporations) is now available at 10 locations in nine major
cities across the country.
4. 2002.12, HSBC launched its Internet banking service in Mainland China
and became the first foreign bank to offer Electronic banking to local citizens
and international customers. Through Hexagon, the Group’s worldwide
PC-based financial services delivery system, a customer with a personal
computer and a modem link can access the wide range of banking services
and financial information available from HSBC Group members.
5. HSBC’s Shanghai and Shenzhen branches have provided RMB banking
products since 1997 and 1998 respectively. Since May 2000, HSBC has also
been able to provide its customers with RMB remittance and clearing services
from Shanghai and Shenzhen through the national networks of the Bank of
China, the China Construction Bank, the Industrial and Commercial Bank of
China and the Agricultural Bank of China, following the signing of cooperation
agreements with the big-four mainland Chinese banks.
6. It Gained permission to be custodians for fund under the QFII scheme.
7. It comes together with DTZ Debenham Tie Leung (Shanghai), jointly
offering a one-stop property service to allow foreign investors, both living
inside and outside China, to buy properties and manage their mortgage
financing in the foreign currency of their choice. During the process, DTZ will
be able to extend assistance in seeking and managing properties - property
searches on secondary market residential properties, site visits, purchase
processing, property management and rental collection, while HSBC will be
able to offer property buyers mortgage financing consultation and a variety of
mortgage loan plans - mortgage loans in RMB or foreign currencies, different
mortgage repayment schemes including monthly, bi-weekly, straight-line and
step-up plans and transfer of rental payments to designated local or overseas
accounts. The service will be available through DTZ offices and HSBC
branches in Beijing, Guangzhou, Shanghai and Shenzhen.
8. Just as HSBC in HK to develop with investment banking, HSBC has a
dedicated China investment banking team providing specialist advice in
mergers and acquisitions, privatizations, equity capital raising, and structured
finance to public sector bodies and listed and private companies in mainland
China. Operating from offices in Beijing and Shanghai, the team is closely
supported by the Group’s Asia-Pacific headquarters in Hong Kong. HSBC is a
top-ranked lead manager of overseas listed equity and equity-linked issues for
companies in Mainland China and the Hong Kong SAR.
Merrill Lynch
Background
In 1907, Charles E. Merrill arrived in New York City to work for a textile
company. Meanwhile, he meets Edmund C. Lynch, who was looking for
someone to share his boardinghouse room, at the 23rd Street YMCA. At the
same time, an enduring partnership began. On 6 January 1914, Charles E
Merrill & Co. opens its doors. Lynch was persuaded and joined Merrill. On 19
May, they opened their office at 7 Wall Street. In the following year, Charles E.
Merrill & Co. changes its name to Merrill, Lynch & Co. In 2000, Merrill Lynch
and HSBC form a joint venture to create the first global, online investment and
banking service aimed at the growing number of self-directed affluent investors
outside the United States. However, in 2002, it was agreed in principle that the
joint venture was to be integrated into the HSBC Group.
As one of the world's leading financial management and advisory companies,
Merrill Lynch has offices in 36 countries and total client assets of approximately
$1.3 trillion. Being an investment bank, Merrill Lynch is a leading global
underwriter of debt and equity securities and strategic advisor to corporations,
governments, institutions and individuals worldwide.
Nowadays, Merrill Lynch has created an equity wholesaling business in
Europe, which provides broker-dealer clients fast and reliable trading in 15,000
European, U.S. and U.K. equities. To enhance the service provided Merrill
Lynch's browser-based MLX portal was introduced to provide a single
electronic window through which investors can access any product, any time in
the trading cycle, anywhere in the world.
Service
As an investment bank, Merrill Lynch serves a number of customers during
normal operation. To facilitate the operation, investors are categorized into
three groups. They are individual Investor, Small/Midsize Business and
Corporations and Institutional Investors.
Individual Investor
Different individuals must have diverse needs. To accommodate different
customers’ needs, various services are offered. They are listed as follows,
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Banking and Lending
Estate Planning
Nonprofit Organization
Retirement
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Business Needs
Investment Strategies
Philanthropy
Tax- Efficient Investment
Small/Midsize Business
At Merrill Lynch, Financial Advisor and a team of dedicated business financial
specialists can help client handle the challenge and take client’s business to
the next level. From personalized service to 24x7 access to online business
banking services, educational information and interactive tools, it offers
solutions to all of the business needs, with the objective to simplify all business
in one account. The captioned account would provide cash management,
business financing, retirement & benefits and selling the business.
Cash Management
WCMA Cash Manager is a 24-hour online business banking service designed
to provide you with more control over your day-to-day cash management
needs.
Business Financing
Access to credit can limit—or unleash—the business ability to grow. Merrill
Lynch can help clients identify the most effective financing solutions to
accommodate all of their business needs. Whether it is short-term financing for
seasonal needs, intermediate-term financing for capital expansion or long-term
financing for the acquisition of a new site, Financial Advisor, working with our
business financing specialists, can tap into a broad range of flexible financing
vehicles and design the right solution for them.
Retirement Benefit
A retirement plan is a critical component of client’s company benefits package,
it can help attract and retain qualified employees. Choosing the right retirement
plan for business should depend on goals, the amount of annual plan
contributions clients can comfortably afford and a wide range of issues
specifically related to the company. At Merrill Lynch, it can provide clients with
a well-designed and properly managed retirement plan that allows the
business owner, to take advantage of tax benefits.
Selling the Business (mainly in US)
If clients are thinking about selling your business, they face a potentially
complex and time-consuming task. Regardless of their industry, they can
benefit from the help of an experienced advisor, from the early stages of
pre-sale planning through the closing of the transaction.
A successful sale requires specialized skill, dedication and focus. With the
right mergers & acquisitions specialist on your side, you can increase the
likelihood of maximizing market value and a successful closing.
Merrill Lynch offers a merger & acquisitions service for small and midsize
businesses. For enterprise values of $10 million (minimum value), the Private
Sales Referral Network (PSRN) provides introductions to independent
boutique investment banking firms with regional and industry expertise.
Corporations and Institutional Investors
Merrill Lynch offers the following service:
1. Equity, debt, and investment banking services to corporations, financial
institutions, agencies and governments around the world.
2. Clients total access to Merrill Lynch's resources in order to deliver totally
integrated and, often, pioneering solutions to our clients.
3. Capital-raising for its clients through securities underwriting, private
placements, loan syndication, and other financing techniques.
4. Investors’ access to world markets through global underwriting, trading,
and distribution of stocks, bonds and other financial instruments, including
government securities, convertibles, derivatives, interest rate swaps, and
foreign currencies.
5. Merger and acquisition solutions to corporations and governments around
the world. We also leverage our industry-leading technology and expertise
to supply clearance, settlement, custody, and securities financing services
to its clients worldwide.
Strategy
1. Enlarge the market ( investors outside US)
In order to increase the variety of customers, Merill Lynch does not only
provide services to US citizens only. In additions, they also try to globalize their
market. In 2000, Merrill Lynch and HSBC form a joint venture to create the first
global, online investment and banking service aimed at the growing number of
self-directed affluent investors outside the United States.
2. Satisfy the needs of different kinds of investors
As an investment bank, Merrill Lynch serves a number of customers during
normal operation. To facilitate the operation, investors are categorized into
three groups. They are individual Investor, Small/Midsize Business and
Corporations and Institutional Investors.
3. Cooperate with other corporations ( Joint Venture with HSBC)
To form a joint venture with HSBC, Merill Lynch can go international with the
help of HSBC. HSBC has run lots of business in Asia and Europe. Merill Lynch
mainly target for the US market before. They can combine their own markets
by the advantage of forming the joint venture.
4. MLX
Merrill Lynch technologists and specialists from our institutional businesses
worked side-by-side to assemble the tools investors need to collect,
manipulate, analyze and act upon the vast amount of real-time proprietary
information provided by Merrill Lynch. To enhance the service, MLX is
designed in user-friendly manner, minimal or no training is required while there
is no charge for the registration.
As for non-trading access, investors will only need a password. On the other
hand, as for trading capability, investors will also be given a digital certificate to
protect the security of their transactions.
References
www.hsbc.com.hk
www.mlhsbc.com
www.ml.com
http://www.mlx.ml.com/public/bin/sitemappublic.asp