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When Sir John Bond joined the Hongkong and Shanghai Banking Corporation in 1961, the bank, which started life in the 1860s to finance the growing trade between Europe, China and India, was still a regional, Hong Kong-based business with just 136 offices in 20 countries.
Today, on news of his retirement as chairman, HSBC has a market value of more than $182bn, making it the world’s third-largest banking group, with around 10,000 offices spread throughout 77 countries.
And it is Sir John, to a great extent, who is credited with this change.
Born in July 1941, Sir John lived briefly in the US following his UK education, on an English Speaking Union scholarship, before taking up with the company where he would spend the next 45 years.
His career took him to Hong Kong, Indonesia, Thailand and Singapore, reflecting the 140-year-old bank’s Asian heritage, before becoming a director in 1988.
HSBC had, in the 1970s, set upon a strategy of expansion through acquisitions, establishing a foothold in markets such as the US during the following decade.
But it was following the formation of HSBC Holdings in 1991, the group holding company quoted in London, and Sir John’s appointment as chief executive in January 1993, that the company’s growth began to mushroom.
The acquisition of the UK’s Midland Bank in 1992 almost doubled the bank’s assets and placed it squarely on the UK high street. By 1998, when Sir John stepped up to become chairman of the group, HSBC had made forays into emerging markets such as Argentina and Brazil, cementing its position as one of the world’s leading financial groups, with operations in 79 countries and assets of $483bn.
But Sir John, who has always eschewed long-term planning, pressed on with expansion.
The integration of Midland was sealed in 1999 when HSBC established a single, global brand. It continued to buy its way into markets around the world, including Turkey, Mexico and Bermuda. The purchase of Crédit Commerical de France in 2000 for $12.5bn underlined the bank’s European focus.
Despite an estimated 50 acquisitions over 12 years, for Sir John’s successor, current chief executive Stephen Green, 57, there remain parts of the world where the company would like to get bigger.
Sir John has identified most of the growth in banking over the next 25 years as increaingly revolving around the twin poles of North America and China, both places where the company feels it can grow. HSBC this year increased its stake in Ping An insurance to 19.9 per cent, positioning itself for the day the mainland market opens up and it is freed from current restrictions.
Moreover HSBC remains a relative newcomer in the US market. It gained a foothold in the 1980s taking control of Midland Marine and built on this with the purchase of Republic National Bank of New York in 1999. Three years ago HSBC made its biggest purchase to date when it paid $15bn for US consumer lender Household International.
“America is the largest financial market in the world and it happens to be accessible,” said Sir John last December, in a interview with FT, adding that the US market is relatively fragmented compared with most European markets, and is generally more profitable.
He did not rule out more deals for HSBC, despite the challenges in picking the acquisitions which generate satisfactory returns and the danger of overreach among the world’s largest financial institutions.
Now these challenges, and HSBC’s deal-making legacy, pass on to Mr Green.
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