[PART A]

1.0 INTRODUCTION

2.0 OPERATION

HSBC has its world headquarters at 8 Canada Square in Canary Wharf, London.

HSBC has a significant presence in each of the world's major financial markets,

with the Americas, Asia Pacific and Europe each representing around one third of

its business. HSBC is the largest bank in Hong Kong and prints most of Hong

Kong's local currency in its own name. As of 2 April 2008, according

to Forbes magazine, HSBC was the fourth-largest bank in the world by assets

(with $2,348.98 billion), the second largest in terms of revenues (with

$146.50 billion) and the largest in terms of market value (with $180.81 billion). It

was also the most profitable bank in the world with $19.13 billion in net income

in 2007 (compared to Citigroup's $3.62 billion and Bank of America's

$14.98 billion in the same period). Since the end of 2005, HSBC has been rated

the largest banking group in the world by Tier 1 capital. In February 2008, HSBC

was named the world's most valuable banking brand by The Banker magazine.

HSBC is known for a conservative and risk-averse approach to business – a

company tradition going back to the 19th century. This reputation has been

brought into question in the 21st century.

In its technical management, however, HSBC has recently suffered a

series of headline-making incidents in which some customer data were allegedly

leaked or simply went missing. Although the consequences turned out to be

small, the embarrassing effect on the group's image did not go unnoticed.

HSBC is currently audited by one of the Big Four auditors, KPMG. The

HSBC and KPMG headquarters are adjacent to one another, with KPMG occupying

15 Canada Square. HSBC Main Building, Hong Kong is also adjacent to KPMG

office located in Prince's Building. A decision on 2 August 2013 made public

that PricewaterhouseCoopers will take on the HSBC audit in 2015.

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2.1 Principal Subsidiaries

2.1.1 Asia Pacific

i.  HSBC Bank Armenia

ii.  HSBC Bank Australia Limited

iii.  The Hongkong and Shanghai Banking Corporation Ltd

 Hang Seng Bank Ltd

 HSBC Bank (China) Company Ltd

iv.  HSBC Bank Malaysia Berhad

v. HSBC Bank Philippines Ltd

vi.  HSBC Bank A.S.

vii.  HSBC BANK INDIA

2.1.2 Europe

i.  HSBC France

ii.  HSBC Trinkaus und Burkhardt AG

iii.  HSBC Bank International 

The offshore banking arm of the HSBC Group, focusing on providing

offshore solutions and cross border services

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to expatriates and migrants. It provides a full range of multi-currency

personal banking services to a range of customer segments, including

a full internet banking and telephone banking service. Sometimes

referred to as "HSBC Offshore", the business also offers independent

financial planning, and has representative offices all over the world,

often working alongside local HSBC operations in those regions. HSBC

Bank International originated from the business started by Midland

Bank and is based in the Channel Islands with further operations on

the Isle of Man. Its operations in the Channel Islands are centred

around its headquarters on the seafront in St Helier, Jersey.

iv.  HSBC Bank Malta plc

v.  HSBC Private Bank (UK) Ltd

vi.  HSBC Bank plc

2.1.3 Americas

i.  HSBC Bank Argentina SA

ii.  HSBC Bank Brazil SA

iii.  HSBC Bank Chile

iv.  HSBC Bank Colombia SA

v.  HSBC Mexico SA

vi.  HSBC El Salvador

vii.  HSBC Paraguay

viii.  HSBC Perú

ix.  HSBC Uruguay

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x.  HSBC Bank Canada

xi.  HSBC Bank USA Inc

xii.  HSBC Finance Corporation

2.1.4 Middle East and North Africa

i.  HSBC Bank Middle East Ltd

ii.  HSBC Bank Egypt SAE

iii.  The Saudi British Bank

2.2 Principal Business Groups and Divisions

HSBC organises its customer-facing activities within four business groups:

Commercial Banking; Global Banking and Markets (investment banking);

Personal Financial Services (retail banking and consumer finance); and Global

Private Banking.

2.2.1 Commercial Banking

HSBC provides financial services to small, medium-sized and middle-market

enterprises. The group has more than 3 million of such customers, including sole

proprietors, partnerships, clubs and associations, incorporated businesses and

publicly quoted companies.

2.2.2 Global Banking and Markets

Global Banking and Markets is the investment banking arm of HSBC. It provides

investment banking and financing solutions for corporate and institutional

clients, including corporate banking, investment banking, capital markets, trade

services, payments and cash management, and leveraged acquisition finance. It

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provides services in equities, credit and rates, foreign exchange, money markets

and securities services, in addition to asset management services.

Global Banking and Markets has offices in more than 60 countries and territories

worldwide, and describes it as "emerging markets-led and financing-focused".

Global Banking and Markets is currently being led by former fixed-income

trader Samir Assaf, who was promoted from global head of markets on 10

December 2010.

2.2.3 Global Private Banking

HSBC Private Bank is the marketing name for the private banking business

conducted by the principal private banking subsidiaries of the HSBC Group

worldwide. HSBC Private Bank, together with the private banking activities

of HSBC Trinkaus, known collectively as Group Private Banking, provides services

to high net worth individuals and their families through 93 locations in some 42

countries and territories in Europe, the Asia-Pacific region, the Americas, the

Middle East and Africa. As of December 2007, profits before tax were

US$1,511 million and combined client assets under management were

US$494 billion.

In September 2008, HSBC announced that it would combine its two Swiss private

banks under one brand name in 2009, with HSBC Guyerzeller and HSBC Private

Bank to be merged into one legal entity, under the newly appointed CEO of HSBC

Private Bank, Alexandre Zeller.

2.2.4 Retail Banking and Wealth Management

HSBC provides more than 100 million customers worldwide with a full range of

personal financial services, including current and savings accounts,mortgage

loans, car financing, insurance, credit cards, loans, pensions and investments.

Retail Banking and Wealth Management was previously referred to as Personal

Financial Services. This rename was announced during HSBC's 2011 Investor

Day.

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2.2.5 Group Service Centres

As a cost-saving measure HSBC is offshoring processing work to lower cost

economies in order to reduce the cost of providing services in developed

countries. These locations take on work such as data processing and customer

service, but also internal software

engineering at Pune (India),Bangalore (India), Hyderabad (India), Vishakhapatna

m (India), Calcutta (India), Guangzhou (China), Curitiba (Brazil) and Kuala

Lumpur (Malaysia).

Chief Operating Officer Alan Jebson said in March 2005 that he would be very

surprised if fewer than 25,000 people were working in the centres over the next

three years: “I don’t have a precise target but I would be surprised if we had less

than 15 (global service centres) in three years’ time.” He went on to say that

each centre cost the bank from $20m to $30m to set up, but that for every job

moved the bank saves about $20,000 (£10,400). Trades unions, particularly in

the UK and US, blame these centres for job losses in developed countries, and

also for the effective imposition of wage caps on their members.

Currently, HSBC operates centres out of eight countries, including Brazil

(Curitiba), the Czech Republic (Ostrava), India (Calcutta, Hyderabad, Bangalore,

Visakhapatam, Bombay, Gurgaon and Pune), China (Shanghai, Guangzhou and

Shenzen), Malaysia (Kuala Lumpur), Poland (Krakow), Sri Lanka (Rajagiriya) and

the Philippines (Manila). The Malta trial for a UK high value call centre has

resulted in a growing operation that country. An option under consideration is

reported to be a processing centre in Vietnam to access the French skills of the

population and therefore cut costs in the bank’s French operations.

3.0 FINANCIAL PERFORMANCE

3.1 Financial Report HSBC Bank Malaysia Berhad Year 2012

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2011

The directors have pleasure in submitting their report and the audited financial

statements of HSBC Bank Malaysia Berhad (“the Bank”) and its subsidiaries (“the

Group”) for the year ended 31 December 2012.

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Principal Activities

The principal activities of the Group are banking and related financial services,

which also include Islamic banking operations. The principal activities of the

subsidiary companies are as disclosed in Note 14 to the financial statements.

There have been no significant changes in these activities during the year.

Dividends

Since the end of the previous financial year, the Bank paid a final dividend for

the year ended 2011 of RM1.747per ordinary share less tax at 25% amounting to

RM300 million as proposed in the previous year's directors' report. The dividend

was paid on 5 April 2012. The Bank also paid an interim dividend of RM1.164 per

ordinary share less tax at 25% amounting to RM200 million in respect of financial

year 2012 on 28 September 2012. The directors now recommend a final dividend

of RM1.747per ordinary share less tax at 25% amounting to RM300million in

respect of the current financial year. This dividend will be recognised in the

subsequent financial period upon approval by the owner of the Bank.

Reserves and Provisions

There were no material transfers to or from reserves or provisions during the

financial year under review except as disclosed in the financial statements. Other

statutory information

Before the financial statements of the Group and of the Bank were finalized, the

directors took reasonable steps to ascertain that:

i) all known bad debts have been written off and adequate provision made for

doubtful debts, and

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ii) any current assets which were unlikely to be realised in the ordinary course of

business have been written down to an amount which they might be expected so

to realise.

In the opinion of the directors, the financial performance of the Group and of the

Bank for the financial year ended 31December 2012 has not been substantially

affected by any item, transaction, or event of a material and unusual nature, nor

has any such item, transaction or event occurred in the interval between the end

of that financial year and the date of this report.

Business Strategy during the Year 2012

Malaysia’s GDP growth for 2012 continues to be spurred by robust domestic and

private consumption, effectively mitigating against negative spillovers from

weaknesses in the external environment. The government’s efforts through the

Economic Transformation Programme (ETP) have contributed to sustainable

economic growth within the country. The Malaysian financial services industry in

particular, despite facing both macroeconomic pressures and regulatory

changes, still recorded strong growth in both loans and deposits. It is against this

backdrop and the intensified competition from existing and new competitors

alike that the Group delivered an outstanding performance, achieving the

highest profit before tax in history as it continues to remain strong in liquidity,

capital strength, cost discipline, relationship-banking, product innovation and

global distribution capabilities. RAM Ratings Services Berhad has reaffirmed

HSBC Bank Malaysia Berhad (“the Bank”) and its wholly owned subsidiary, HSBC

Amanah Malaysia Berhad’s (“HSBC Amanah”) AAA/P1 ratings, reflecting the

Group's robust asset quality and strong financial standing. The Bank maintained

its market leader position in various segments and won numerous awards in

2012. Amongst the awards won are:

HSBC Bank Malaysia

1. Best Bank In Malaysia - The Asset Triple A Country Awards (10th consecutive

year)

2. Best Debt House - The Asset Triple A Country Awards (6th consecutive year)

3. Best Domestic Cash Management Bank - Euromoney (Euromoney Cash

Management Poll) (6th consecutive year)

4. Best Foreign Commercial Bank - Finance Asia ( 9th consecutive year)

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5. Best Foreign Bank - Alpha Southeast Asia (4th consecutive year)

HSBC Amanah

1. Best Sukuk House 2012 - Euromoney

2. Most Innovative Deal (Axiata RMB Sukuk) - Euromoney

3. Best Islamic Finance Bank in South East Asia - Alpha Southeast Asia

4. Best Project Financing (Tanjung Bin Energy USD2.1 Billion Senior Loan) - Asia

Money

5. Best Islamic Finance Deal (Axiata RMB Sukuk) - Finance Asia

6. Project Bond of the Year (Tanjung Bin Energy MYR 3.29 Billion Sukuk) - PFI

Awards

7. Best Sovereign Sukuk (Government of Malaysia US2 Billion Dual Tranche

Global Sukuk) – The Asset Triple A Asian Awards

8. Islamic Deal of the Year - (Government of Malaysia US2 Billion Dual Tranche

Global Sukuk) – The Asset Triple A Asian Awards

9. Best Islamic Deal Malaysia - (Government of Malaysia US2 Billion Dual Tranche

Global Sukuk) – The Asset Triple A Asian Awards

10. Best International Islamic Bank– Euromoney

11. Outstanding Contribution to Islamic Finance Award - (Government of

Malaysia Wakala Global Sukuk Berhad) – Euromoney

The Retail Banking and Wealth Management (RBWM) segment has seen

significant additions in the range and diversity of wealth and asset management

products and services offered during the year. The launch of the HSBC Fund

Navigator, an online unit trust fund analytical tool to aid customers in making

informed investment decisions is the first amongst retail banks in Malaysia, and

a testament of the Group’s commitment to develop products and solutions in

response to market trends and in support of our customers’ personal and

business needs.

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3.2 Financial Report HSBC Bank Malaysia Berhad Year 2011

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2011

The directors have pleasure in submitting their report and the audited financial

statements of HSBC Bank Malaysia Berhad (“the Bank”) and its subsidiaries (“the

Group”) for the year ended 31 December 2011.

Principal Activities

The principal activities of the Group are banking and related financial services,

which also include Islamic banking operations. The principal activities of the

subsidiary companies are as disclosed in Note 14 to the financial statements.

There have been no significant changes in these activities during the year

Dividends

Since the end of the previous financial year, the Bank paid a final dividend for

the year ended 2010 of RM1.456 per ordinary share less tax at 25% amounting

to RM250 million as proposed in the previous year's directors' report. The

dividend was paid on 29 March 2011. The Bank also paid an interim dividend of

RM1.164 per ordinary share less tax at 25% amounting to RM200 million in

respect of financial year 2011 on 8 September 2011. The directors now

recommend a final dividend of RM1.747 per ordinary share less tax at 25%

amounting to RM300 million in respect of the current financial year. This

dividend will be recognised in the subsequent financial period upon approval by

the owner of the Bank.

Reserves and Provisions

There were no material transfers to or from reserves or provisions during the

financial year under review except as disclosed in the financial statements.

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Other statutory information

Before the statements of financial position and statements of comprehensive

income of the Group and of the Bank were finalised, the directors took

reasonable steps to ascertain that:

i) all known bad debts have been written off and adequate provision made for

doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of

business have been written down to an amount which they might be expected so

to realise.

At the date of this report, the directors are not aware of any circumstances:

i) that would render the amount written off for bad debts, or the amount of

provision for doubtful debts, in the financial statements of the Group and of the

Bank inadequate to any substantial extent.

ii) that would render the value attributed to the current assets in the financial

statements of the Group and of the Bank misleading, or

iii) which have arisen which render adherence to the existing methods of

valuation of assets or liabilities of the Group and of the Bank misleading or

inappropriate, or

At the date of this report, there does not exist:

i) any charge on the assets of the Group or of the Bank that has arisen since the

end of the financial year and which secures the liabilities of any other person, or

ii) any contingent liability in respect of the Group or of the Bank that has arisen

since the end of the financial year other than in the ordinary course of business.

No contingent liability or other liability of any company in the Group has become

enforceable, or is likely to become enforceable within the period of twelve

months after the end of the financial year which, in the opinion of the directors,

will or may affect the ability of the Group and of the Bank to meet their

obligations as and when they fall due.

In the opinion of the directors, the financial performance of the Group and of the

Bank for the financial year ended 31 December 2011 has not been substantially

affected by any item, transaction, or event of a material and unusual nature, nor

has any such item, transaction or event occurred in the interval between the end

of that financial year and the date of this report.

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Business Strategy during the Year 2011

The Malaysian financial services industry, supported by healthy local consumer

demand and robust government and private investment activities, recorded a

strong growth in both loans and deposits despite the uncertainty of the global

economy. Amidst this backdrop, the Group delivered a very strong performance,

achieving the highest profit before tax in history. The Group remains strong in

liquidity, capital strength, cost discipline, relationship-banking, product

innovation and global distribution capabilities.

RAM Ratings Services Berhad has reaffirmed HSBC Bank Malaysia Berhad’s (“the

Bank”) AAA/P1 ratings, reflecting the Bank's robust asset quality and strong

financial standing. Similarly, HSBC Amanah Malaysia Berhad ("HSBC Amanah"),

the Bank’s wholly owned subsidiary was also assigned ratings of AAA/P1 in its

inaugural credit rating exercise during the year. The Bank maintained its market

leader position in various segments and won various awards in 2011. Amongst

the awards won are:

1. Best Islamic/Most Innovative Islamic Finance Deal of the Year in Southeast

Asia (Government of Malaysia’s USD1.2 Billion & USD800 Million Wakala Global

Sukuk. HSBC was Joint Lead Managers and Joint Bookrunners) – Alpha Southeast

Asia

2. Best Debt House – The Asset Triple A Country Awards

3. Best Bank – The Asset Triple A Country Awards

4. Best Foreign Commercial Bank – Finance Asia

5. Best Foreign Bank – Alpha Southeast Asia

6. Best Corporate / Institutional Internet Banking – Global Finance (Country

Awards)

7. Best Fund Administrator, Retail Funds - The Asset’s 2011 Triple A Securities

and Fund Services awards

8. Best Cash Management Bank in Malaysia – Euromoney (Euromoney Cash

Management Poll) The Group is committed to developing products and solutions

in response to market trends and has expanded its rangeof market related

products and services accordingly. The Bank capitalised on its debt capital

market leadership to secure key deals, and once again asserted its market

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leadership position among foreign banks in the debt capital markets by

maintaining its position as the No.1 foreign bookrunner for Malaysian Ringgit

bonds and Islamic bonds for the fifth consecutive year.

In 2011, the Group continued to expand its branch and delivery network with the

opening of 2 additional conventional branches and 7 additional Islamic branches,

bringing its total branch network to 57 branches (42 conventional, 15 Islamic).

The Group also joined the Malaysian Electronic Payment System (“MEPS”), a

shared automatic teller machine (“ATM”) network with more than 10,000 ATMs

nationwide. The Group's approach to sustainability is about managing its

business successfully, profitably and for the long term. At HSBC Malaysia, our

investment in the community is primarily focused on education and the

environment because we believe they provide the fundamental building blocks

for the development of the society. The Group endeavours to contribute towards

changing people's lives and the environment they live in for the better, and

encourages active participation from our colleagues in all corporate sustainability

initiatives.

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3.3 Financial Report HSBC Bank Malaysia Berhad Year 2010

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2010

The directors have pleasure in submitting their report and the audited financial

statements of HSBC Bank Malaysia Berhad (“the Bank”) and its subsidiaries (“the

Group”) for the year ended 31 December 2010.

Principal Activities

The principal activities of the Group are banking and related financial services,

which also include Islamic banking operations. The principal activities of the

subsidiary companies are as disclosed in Note 14 to the financial statements.

There have been no significant changes in these activities during the year.

Dividends

Since the end of the previous financial year, the Bank paid a final dividend of

RM1.456 per ordinary share less tax at 25% amounting to RM250 million as

proposed in the previous year's directors' report. The Bank also paid an interim

dividend of RM1.164 per ordinary share less tax at 25% amounting to RM200

million in respect of financial year 2010.

The directors now recommend a final dividend of RM1.456 per ordinary share

less tax at 25% amounting to RM250 million in respect of the current financial

year.

Reserves and Provisions

There were no material transfers to or from reserves or provisions during the

financial year under review except as disclosed in the financial statements.

Other statutory information

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Before the statements of comprehensive income and statements of financial

position of the Group and of the Bank were finalised, the directors took

reasonable steps to ascertain that:

i) all known bad debts have been written off and adequate

provision made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the

ordinary course of business have been written down to an

amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances:

i) that would render the amount written off for bad debts, or the amount

of the provision for doubtful debts, in the financial statements of the

Group and of the Bank inadequate to any substantial extent.

ii) that would render the value attributed to the current assets in the

financial statements of the Group and of the Bank misleading, or

iii) which have arisen which render adherence to the existing methods of

valuation of assets or liabilities of the Group and of the Bank

misleading or inappropriate, or

iv) not otherwise dealt with in this report or the financial statements, that

would render any amount stated in the financial statements of the

Group and of the Bank misleading.

In the opinion of the directors, except for those matters disclosed in the financial

statements, the financial performance of the Group and of the Bank for the

financial year ended 31 December 2010 has not been substantially affected by

any item, transaction, or event of a material and unusual nature, nor has any

such item, transaction or event occurred in the interval between the end of that

financial year and the date of this report.

Business Strategy during the Year 2010

2010 has been a year of progressive recovery for the financial services industry.

The Group delivered a strong performance, with profit before tax exceeding the

RM1 billion mark and is now well on track to resuming pre-crisis level profitability

and long term organic growth in all business segments. The Group continued to

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remain strong in liquidity, capital strength, cost discipline, relationship-banking

and global distribution capabilities. Rating Agency Malaysia has reaffirmed HSBC

Bank Malaysia Berhad’s (“the Bank”) AAA/P1 ratings, reflecting the Bank's robust

asset quality and strong financial standing. The Bank maintains its market leader

position in various segments and won various awards in 2010, which included:

1. Best Deal – The Asset Triple A Country Awards

(HSBC was joint bookrunner and joint lead manager in the US$1.25 billion

Government of Malaysia Sukuk)

2. Best Debt House – The Asset Triple A Country Awards

3. Best Bank – The Asset Triple A Country Awards

4. Best Sub-Custodian in Malaysia – The Asset Triple A Asian Awards

5. Best Domestic Custodian in Malaysia – The Asset Triple A Asian Awards

6. Best Cash Management Bank in Malaysia – Euromoney

8. Best Foreign Bank in Malaysia – Alpha Southeast Asia

9. Best Foreign Exchange Provider 2010 – Global Finance

The Group is committed to developing products and solutions in response to

market trends and has expanded its range of market related products and

services accordingly. As a pioneer sukuk provider, HSBC Amanah Malaysia

Berhad’s (“HSBC Amanah”) brand name was also used as leverage to expand its

market share of the Islamic global markets business. The Bank capitalised on its

debt capital market leadership to secure key deals, and once again asserted its

market leadership position among foreign banks in the debt capital markets by

maintaining its position as the No.1 foreign bookrunner for Malaysian Ringgit

bonds and Islamic bonds for the fourth consecutive year. Retail banking

experienced intensified competition from both new and existing competitors and

a decline in cards issuance due to the introduction of the credit card service tax

in late 2009. However, robust growth in domestic consumption and the

normalisation of interest rates allowed retail banking to grow in strength. In

2010, the Group focused on expanding its investment and insurance product

range and the Premier and Advance proposition for both the conventional and

Islamic banks.

HSBC Amanah was awarded the Best Foreign Islamic Bank in Malaysia by

Alpha Southeast Asia, a testament to its commitment in providing a

comprehensive and innovative range of Islamic financing products and services.

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HSBC Amanah opened 4 more branches in 2010, bringing its total branch

network to 8, in addition to launching its own version of Amanah Premier and

Advance, which offers globally linked up banking services with Shariah compliant

financial solutions.

In commercial and corporate banking, the Group continues to capitalise on

the competitive advantage offered by its international network and connectivity.

There is an increased emphasis on building stronger alignment among domestic

business segments and with HSBC offices worldwide. During the year, the Group

successfully launched One HSBC Account Opening module in Malaysia. The One

HSBC initiative is a re-engineering process to place HSBC Group offices

worldwide onto a single global system or platform and is part of HSBC Group’s

strategy in managing costs and improving efficiencies by promoting direct

chanels, automating manual processes and eliminating redundant systems. The

Group also continues to make a significant commitment to corporate

sustainability (“CS”) through a focus on three major areas: Environment,

Education and Community. The Group contributed to various educational,

community and charity programmes during the year, including sponsoring NGOs

on environmental research projects

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4.0 EVENTS

Sir Thomas Jackson became chief manager in 1876. During his twenty-six year

tenure, the Bank became a leader in Asia. Notable events included being the first

bank established in Thailand in 1888, where it printed the country's first

banknotes acting as banker for the Hong Kong government from the 1880s; and

participating in the management of British colonial government accounts in

China, Japan, Penang and Singapore. A period of expansion followed, with new

branch offices opening in Bangkok (1921), Manila (1922) and Shanghai (1923),

and a new head office building in Hong Kong in 1935.

In anticipation of the Japanese invasion of Hong Kong in 1941, the Bank's head

office moved to London. During the period 1941-1943 the chief manager

Sir Vandeleur Gray burn, and his successor David C Edmondson, both died while

interned by the Japanese. Arthur Morse was appointed Chief Manager in 1943

and led the bank after the war. The head office moved back to Hong Kong in

1946. During the Japanese occupation the Bank's head office building was

occupied as the headquarters of the Hong Kong Japanese military government

Michael Turner became Chief Manager in 1953 and set about diversifying the

business. His tenure came to an end in 1962 having established The Hong Kong

and Shanghai Banking Corporation of California 1955 and having acquired The

British Bank of the Middle East and theMercantile Bank (based in India) in Aug

1959. Turner was succeeded in 1962 by Jake Saunders. In 1964 the Chief

Managership was superseded as the top executive role in the bank by an

Executive Chairmanship. Saunders took this role until retirement in 1972 and

was succeeded as Chief Manager in 1964 by H.J. Shen, the managing director of

Maysun Trading Co. and the former head of the Central Trust of China, who

became the first ethnic Chinese to be appointed to the position of Chief Manager

of the bank. Under Saunders' tenure the bank continued to expand. 1965 saw

the bank purchase a controlling interest in Hang Seng Bank of Hong Kong, and

1972 the formation of a merchant banking arm, Wardley Limited.

In 1980, the Bank launched a hostile takeover bid for the Royal Bank of Scotland,

although the bid was blocked by the British government.

In 1980, the Bank, now under the chairmanship of Michael Sandberg, acquired a

51% stake in Marine Midland Bank, of the United States of America, and

continued its expansion with the establishment of Hongkong Bank of

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Canada (now HSBC Bank Canada) in 1981 andHongkongBank of Australia

Limited (now HSBC Bank Australia Limited) in 1986. 1987, under the

Chairmanship of William Purves, saw the bank's ownership of Marine Midland

Bank increased to 100% and the acquisition of a 14.9% share in Midland Bank in

the United Kingdom.

The present building in Hong Kong was designed by Sir Norman Foster and was

held as one of the most expensive and technologically advanced buildings in the

world in 1986, costing HK$5.3 billion. In 1991, the London-based HSBC Holdings

plc was established as a parent company for the group; shares are traded on the

London, Hong Kong, Paris, New York and Bermuda stock exchanges.

Asia Pacific Operations (Start Of Operations)

Bangladesh

HSBC started operations in 1996. The bank primarily focuses on urban areas and

has branches in most areas of the capital city of Dhaka, it also has branches in

the cities of Chittagong and Sylhet. The bank also has a good number of ATM

booths in the cities present, it also has booths in most five star hotels.

HSBC Bangladesh is rated ‘AAA’ in the Long-term and ST-1 rating in the Short-

term, which are the highest level of ratings for any bank or financial institution in

Bangladesh.

HSBC Bangladesh offers a comprehensive range of financial services such as

commercial banking, consumer banking, payments and cash management, trade

services, treasury, and custody and clearing. The bank also offers offshore

banking in the Export Processing Zones, this is only limited to investors in the

EPZs. A special service called NRB Services is also available for nonresident

Bangladeshis, this service allows consumers to maintain accounts in US Dollars,

Pound Sterling and Euros. People using this service can freely remit money from

Bangladesh to any part of the world and can access their money from any HSBC

booth around the world.

HSBC Bangladesh has a help center which operates on a daily basics. It is one of

the very few banks in the country to offer day night banking. It also has begun to

support education initiatives for people with disabilities; the bank recently

partnered with the Blind Education and Rehabilitation Development

Organization to give scholarships to people with blindness.

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China

HSBC established its Shanghai branch office on 3 March 1865 and has had a

continuous presence in the city since then, except during the Japanese

Occupation. Until the economic reforms of the late 1970s, its activities were

mainly in inward remittances and export bills, however its activities now span a

wider range.

On 6 August 2004, HSBC announced that it would pay USD 1.75 billion for a

19.9% stake in Shanghai-based Bank of Communications. At the time of the

announcement, Bank of Communications was China's fifth-largest bank and the

investment by HSBC was eight times bigger than any previous foreign

investment in a Chinese bank. The industry considered this move, giving HSBC a

lead in the race to grab pieces of mainland China's banking market. A year

earlier, HSBC had joined with Hong Kong's Shanghai Commercial Bank to

purchase an 11% stake in Bank of Shanghai (HSBC paid USD 62.6 million for an

8% stake) and USD 733 million for a 10% stake in Ping An Insurance.

In 1 April 2007, the mainland China offices of The Hongkong and Shanghai

Banking Corporation transferred to its subsidiary HSBC Bank (China), and it

started operations in 2 April.

In January 2013, Wendy Yuen (Head of Corporate & Commercial Banking and

Sales Management, Hang Seng Bank, an HSBC subsidiary) and her friend

certified public accountant Alice Wong (YY Chui & Company) refused to pay

tuition fees for their then 8-year-old daughters, primary 3 pupils at Diocesan

Girls Junior School in Jordan, Kowloon, Hong Kong. In addition, Wendy Yuen and

Alice Wong cyber attacked the tutor for more than 8 months, making it

impossible for the tutor to find work. As of today, the debt and lost income have

not been paid. Hang Seng Bank representatives refused to intervene or address

the bad credit history of Wendy Yuen, a senior employee, saying it was a

personal matter.

India

In 1959 HSBC acquired The Mercantile Bank of India, London and China,

established in October 1853 in Bombay (now Mumbai). HSBC is now one of the

fastest growing foreign banks in India, both in domestic banking and support

operations for worldwide operations (seeGroup Service Centres).

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Indonesia

The Hongkong and Shanghai Banking Corporation opened its first Indonesian

office in Jakarta in 1884. Having been able to restart its operations after

the Second World War, it was again forced to close in mid-1960s, however the

Bank was granted a new banking licence in 1968 its operations have grown to

make it one of the largest foreign banks operating in Indonesia.

Japan

HSBC opened its first Japan operations in Yokohama in 1866, followed by

branches in other trading ports such as Osaka, Kobe andNagasaki. It was heavily

involved in the early development of Japan's current monetary system, and

consulted with the government regarding fiscal policy, currency printing and

related matters.

HSBC does not conduct ordinary retail banking in Japan, but conducts investment

banking in Tokyo and Osaka. Since 2007 it has expanded its HSBC Premier

private banking services for the "Mass affluent" market or high net worth

individual clients. HSBC Premier has seven Premier branches in Japan including

centers in

the Hiroo, Akasaka, Marunouchi(flagship), Ginza, Yokohama, Ikebukuro, areas of

Tokyo and one in Kobe.

In December 2011, HSBC announced to selling its private bank in Japan to Swiss

peer Credit Suisse for an undisclosed sum, but at the end of October 2011 the

value of the gross assets included in the sale was about $2.7 billion. It was a

strategy to cut $3.5 billion annual costs by quiting businesses or countries where

it lacks scale which Credit Suisse has a larger business in Japan than HSBC and in

line with a global business restructuring it announced that will see it cut 30,000

jobs as it pares back small or inefficient operations.

New Zealand

HSBC's operations in New Zealand are as a branch of The Hongkong and

Shanghai Banking Corporation, which first gained a licence from the Reserve

Bank of New Zealand on 22 July 1987. Today HSBC offers a range of financial

products from a network of 9 offices.

Philippines

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HSBC's history in the Philippines dates back more than 130 years with the

establishment of their first branch in Binondo, Manila in 1876. In its early years of

operation, HSBC serviced the booming Philippine sugar industry. At the turn of

the century, it financed railways that connected provincial towns across Luzon to

Manila. During the American regime, HSBC was called to advise on Philippine

currency reform. Its current headquarters are in Fort Bonifacio. Today, HSBC

Philippines operates in key Philippine cities such as Cebu and Davao. It has

ended Citibank and Standard Chartered's duopoly on international banking in the

Philippines.

Singapore

In Singapore, The Hongkong and Shanghai Banking Corporation Limited operates

as a full service bank with its headquarters in Collyer Quay. It opened its doors in

December 1877. Today, HSBC's flagship office remains at the original Collyer

Quay site where its first branch was opened. Its main office is located

at Mapletree Business City in Pasir Panjang, Harbourfront.

HSBC Singapore is a Qualifying Full Bank with 11 branches incorporating 5 HSBC

Premier Centres and 33 Automated Teller Machines in Singapore and offers a

comprehensive range of financial services including commercial banking,

investment and private banking, insurance, forfaiting and trustee services, and

securities and capital markets services.

South Korea

HSBC is expanding in competitive South Korean market, operating from a

network of 11 branches, the first having been opened in Jemulpo in 1897 .

Sri Lanka

HSBC has been present in Sri Lanka for 120 years. The Hongkong and Shanghai

Banking Corporation Limited established its first branch inColombo Sri Lanka on

1 July 1892, just 27 years after it began operating in Hong Kong and Shanghai. It

has established itself as one of the largest and most profitable banks operating

in the country. It has achieved leadership in Corporate Banking, Capital Markets

and Credit Card issuance.

Taiwan

HSBC’s presence in Taiwan dates back to 1885 when The Hongkong and

Shanghai Banking Corporation appointed an agent in Tamsui. A full service

branch was established in Taipei in 1984. The bank now has a network of 8

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branches (Hyperlink to service channel island-wide, including Taipei, Chien

Kuo, Pan Chiao, Tien Mu, Taoyuan, Taichung, Tainan, and Kaohsiung. In 2007,

The Hongkong and Shanghai Banking Corporation acquired The Chinese Bank in

Taiwan. The acquisition made HSBC's nation-wide branch network increase to 47.

Thailand

HSBC initially opened for business in Thailand in 1888, becoming the first

commercial bank in the country. HSBC has made significant contributions to the

establishment of solid foundations for Thailand’s financial and banking sectors.

For example, in 1889 HSBC issued the first banknotes in Thailand. HSBC also

issued the first foreign loan to the Thai government for its railroad construction

project. HSBC's main branch office in Thailand is situated in Bangkok on Rama IV

Road opposite Lumpini Park. In 2011, Phase 2 of the new Financial Sector Master

Plan allowed foreign banks to open up to two branches in the Kingdom of

Thailand in preparation for full retail operations. Accordingly, a second branch

was opened on Thonglor (Sukhumvit 55) in early 2011.

In January 2012 HSBC announced the sale of its Thailand retail banking

operations to the Krungsri Group (Bank of Ayudhya) and its intention to maintain

only corporate banking business in Thailand.

Vietnam

In Vietnam, HSBC first opened an office in Saigon (now Ho Chi Minh City) in 1870.

In August 1995, HSBC opened a full-service branch in Ho Chi Minh City. In 2005,

HSBC also opened its second branch in Hanoi and established a representative

office in Can Tho.

On 29 December 2005, HSBC acquired 10% share capital of Vietnam

Technological and Commercial Joint Stock Bank (Techcombank), one of the

largest joint stock commercial banks in Vietnam by equity. In July 2007, HSBC

became the first foreign bank to increase its stake in Techcombank to 15%. In

September 2008, HSBC completed the increase of its stake in Techcombank to

20%, became the first foreign bank in Vietnam to hold a 20% interest in a

domestic bank.

In September 2007, HSBC acquired 10% share capital of Bao Viet Holdings,

becoming the sole foreign strategic partner of Vietnam’s leading insurance

company. In October 2009, HSBC signed an agreement to increase its

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shareholding in Bao Viet Holdings to 18% from 10% for VND1.88 trillion

(approximately US$105.3 million).

On 1 January 2009, HSBC started operating its locally incorporated entity and

became the first foreign bank to incorporate in Vietnam, after gaining approval

from the State Bank of Vietnam (SBV) to set up a Wholly Foreign-Owned Bank

(WFOB) in Vietnam in September 2008.

From Early Establishment To 2013

The Hong Kong and Shanghai Banking Corporation was founded by Scotsman Sir

Thomas Sutherland in the then British colony of Hong Kong on 3 March 1865,

and in Shanghai one month later, benefiting from the start of trading into China,

including opium trading. In 1980, HSBC acquired a 51% shareholding in US-

based Marine Midland Bank, which it extended to full ownership in 1987.

HSBC Holdings plc was established in the United Kingdom in 1991 as the parent

company to the Hongkong and Shanghai Banking Corporation in preparation for

its purchase of the UK-based Midland Bank and the impending transfer of

sovereignty of Hong Kong to China. HSBC Holdings' acquisition of Midland Bank

was completed in 1992 and gave HSBC a substantial market presence in the

United Kingdom. As part of the takeover conditions for the acquisition, HSBC

Holdings plc was required to relocate its world headquarters from Hong Kong to

London in 1993.

Major acquisitions in South America started with the purchase of the Banco

Bamerindus of Brazil for $1bn in March 1997 and the acquisition of Roberts SA de

Inversions of Argentina for $600m in May 1997. In May 1999, HSBC expanded its

presence in the United States with the purchase of Republic National Bank of

New York for $10.3bn

Expansion into Continental Europe took place in April 2000 with the acquisition

of Crédit Commercial de France, a large French bank for £6.6bn. In July 2001

HSBC bought Demir bank, an insolvent Turkish bank. In July 2002, Arthur

Andersen announced that HSBC USA, Inc., through a new subsidiary, Wealth and

Tax Advisory Services USA Inc. (WTAS), would purchase a portion of Andersen's

tax practice. The new HSBC Private Client Services Group would serve the wealth

and tax advisory needs of high net worth individuals. Then in August 2002 HSBC

acquired Grupo Financiero Bital, SA de CV, Mexico's third largest retail bank for

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$1.1bn.[16] In November 2002 HSBC expanded further in the United States. Under

the chairmanship of Sir John Bond, it spent £9 billion (US$15.5 billion) to

acquire Household Finance Corporation (HFC), a US credit card issuer

and subprime lender. In a 2003 cover story, The Banker noted "when banking

historians look back, they may conclude that [it] was the deal of the first decade

of the 21st century". Under the new name of HSBC Finance, the division was the

second largest subprime lender in the US.

On 22 November 2001, the Hongkong and Shanghai Banking Corp would provide

a fixed-rate mortgage to buyers of Cheung Kong (Holdings)' Victoria Towers

residential development.

The new headquarters of HSBC Holdings at 8 Canada Square, London officially

opened in April 2003.[21]

In September 2003 HSBC bought Polski Kredyt Bank SA of Poland for $7.8m. In

June 2004 HSBC expanded into China buying 19.9% of the Bank of

Communications of Shanghai. In the United Kingdom HSBC acquired Marks &

Spencer Retail Financial Services Holdings Ltd for £763m in December

2004. Acquisitions in 2005 included Metris Inc, a US credit card issuer for $1.6bn

in August and 70.1% of Dar es Salaam Investment Bank of Iraq in October. In

April 2006 HSBC bought the 90 branches in Argentina of Banca Nazionale del

Lavoro for $155m. In December 2007 HSBC acquired the Chinese Bank in

Taiwan. In May 2008 HSBC acquired IL&FS Investment, an Indian retail broking

firm.

In 2005 Bloomberg Markets magazine accused HSBC of money-laundering for

drug dealers and state sponsors of terrorism. Then-CEO Stephen Green said that

“This was a singular and wholly irresponsible attack on the bank’s international

compliance procedures”, but subsequent investigation indicated that it was

accurate and proved that the bank was involved in money

laundering throughout Mexico. U.S. Assistant Attorney General Lanny Breuer

characterized HSBC compliance during this period as "stunning failures of

oversight – and worse ... The record of dysfunction that prevailed at HSBC for

many years was astonishing.

In March 2009, HSBC announced that it would shut down the branch network of

its HSBC Finance arm in the U.S., leading to nearly 6,000 job losses and leaving

only the credit card business to continue operating. Chairman Stephen

Green stated, "HSBC has a reputation for telling it as it is. With the benefit of

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hindsight, this is an acquisition we wish we had not undertaken. According to

analyst Colin Morton, "the takeover was an absolute disaster".

Although it was at the centre of the subprime storm, the wider group has

weathered the financial crisis of 2007–2010 better than other global banks.

According to Bloomberg, "HSBC is one of world’s strongest banks by some

measures". When HM Treasury required all UK banks to increase their capital in

October 2007, the group transferred £750 million to London within hours, and

announced that it had just lent £4 billion to other UK banks. In March 2009, it

announced that it had made US$9.3bn of profit in 2008 and announced a

£12.5bn (US$17.7bn; HK$138bn) rights issue to enable it to buy other banks that

were struggling to survive. However, uncertainty over the rights' issue's

implications for institutional investors caused volatility in the Hong Kong stock

market: on 9 March 2009 HSBC's share price fell 24.14%, with 12 million shares

sold in the last few seconds of trading.

On 11 May 2011 the new chief executive Stuart Gulliver announced that HSBC

would refocus its business strategy and that a large-scale retrenchment of

operations, particularly in respect of the retail sector, was planned. HSBC would

no longer seek to be 'the world's local bank', as costs associated with this were

spiralling and US$3.5bn needed to be saved by 2013, with the aim of bringing

overheads down from 55% of revenues to 48%. In 2010, then-chairman Stephen

Green planned to depart HSBC to accept a government appointment in the Trade

Ministry. Group Chief Executive Michael Geoghegan was expected to become the

next chairman. However, while many current and former senior employees

supported the tradition of promoting the chief executive to chairman, many

shareholders instead pushed for an external candidate. HSBC's board of directors

had reportedly been split over the succession planning, and investors were

alarmed that this row would damage the company.

On 23 September 2010, Geoghegan announced he would step down as chief

executive of HSBC. He was succeeded as chief executive of HSBC by Stuart

Gulliver, while Green was succeeded as Chairman by Douglas Flint; Flint was

serving as HSBC's finance director (chief financial officer). August 2011 Further

to CEO Stuart Gulliver's plan to cut $3.5 billion in costs over the next 2 years,

HSBC announced that it will cut 25,000 jobs and exit from 20 countries by 2013

in addition to 5,000 job- cuts announced earlier in the year. The consumer

banking division of HSBC will focus on the UK, Hong Kong, high-growth markets

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such as Mexico, Singapore, Turkey and Brazil, and smaller countries where it has

a leading market share. According to Reuters, Chief Executive Stuart Gulliver

told the media, "There will be further job cuts. There will be something like

25,000 roles eliminated between now and the end of 2013.

In August 2011 "to align our U.S. business with our global network and meet the

local and international needs of domestic and overseas clients", HSBC agreed to

sell 195 branches in New York and Connecticut to First Niagara Financial Group

Inc for around $1 billion and announced the closure of 13 branches in

Connecticut and New Jersey. The rest of HSBC's U.S. network will only be about

half from a total 470 branches before divestments. On 9 August 2011, Capital

One Financial Corp. agreed to acquire HSBC's U.S. credit card business for $2.6

billion, netting HSBC Holdings an estimated after-tax profit of $2.4 billion. In

September it was announced that HSBC seeks to sell its general insurance

business for around $1 billion.

In 2012, HSBC was the subject of hearings of the U.S. Senate permanent

subcommittee for investigations for severe deficiencies in its antimoney

laundering practices. On 16 July the committee presented its findings. Among

other things it concludes that HSBC has been transferring $7 billion in banknotes

from its Mexican to its US subsidiary, much of it related to drug dealing, was

disregarding terrorist financing links and was actively circumventing U.S.

safeguards to block transactions involving terrorists, drug lords and rogue

regimes, including hiding $19.4 billion in transactions with Iran.

In July 2012 HSBC came under investigation for allegedly assisting in the money

laundering of drug dealers and terrorist money  for many years, after a probe by

the US Federal Reserve and Office of the Comptroller of the Currency found that

there was "significant potential for unreported money laundering or terrorist

financing".

On 11 December 2012, HSBC agreed to pay a record $1.92 billion fine in this

money laundering case. "Bank officials repeatedly ignored internal warnings that

HSBC's monitoring systems were inadequate, the Justice Department said. In

2008, for example, the CEO of HSBC Mexico was told that Mexican law

enforcement had a recording of a Mexican drug lord saying that HSBC Mexico

was the place to launder money. The DOJ, however, decided not to pursue

criminal penalties, a decision which the New York Times labelled a "dark day for

the rule of law.

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"We accept responsibility for our past mistakes. We have said we are profoundly

sorry for them, and we do so again." HSBC Chief Executive Stuart Gulliver said.

In July 2013, Alan Keir was appointed Chief Executive of HSBC Bank plc after

Brian Robertson resigned from his post. Keir’s duties include overseeing the

firm’s UK, European, Middle Eastern and African divisions.

5.0 OTHERS

HSBC (Hong Kong and Shanghai Banking Corporation) Holding Plc is the worlds’

largest banking group and sixth world largest company according to Forbes

Magazine in 2009. Now it spread its banking business all over the world. HSBC

bank was funded in 1865. Now the bank has network of some 10,000 properties

in 86 countries around the world. The bank employed 325,000 full time and part

time employees all over the world. The bank provides comprehensive range of

financial services-personal, commercial, corporate, institutional, investment and

private banking clients all over the world. The bank provides financial service to

100 million customers in different regions all over the world. HSBC are held over

by 210,000 shareholders in 120 countries. These shares are traded in New York

Stock Exchange in the form of American Depository shares. It is listed in London,

Hong Kong, New York, Paris and Bermuda stock exchanges. In 2008 the bank

made revenue of $137,309,000,000 and its net profit was $6,498,000,000. In

2009 when some of the major banks in the world are in trouble HSBC remain in

top form because of its strong foundation.

5.1 Ethical Issues Relating to HSBC

Rights, Conflicts and Responsibilities

Rights: HSBC is an employee friendly company. The bank is always notice to the

benefit of the employees. Maintaining work, life, balance polices is the main

motto of the bank. The employees are openly giving their opinion to their line

manager. They can easily take part in the strategy develop meetings. The bank

provides world class remuneration and training facilities to their employees. The

bank is also providing share options to their employees. The employees

participate in various variable play agreements. As a part of the corporate social

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responsibility the bank employed differently able people. These are the brief

description of the rights of the HSBCs’ employees.

Conflicts: It is the right of the employee to give his or her openly to the meeting

and in the time of making strategic plan. So there may be some conflicts

between the employees in the bank. The bank employed 325,000 employees all

over the world. so there may be interbank conflicts. HSBC has more than

210,000 shareholders all over the world. They expect more profit from the bank.

So there may be some sort of conflicts between the shareholders and the bank.

HSBC is one of the world leading banking corporations of the world. So there may

be some conflicts with other banks in terms of banking service, in terms of

making profits, in terms of providing profit to their shareholders and in terms of

hiring best employees from the market.

Responsibilities: The main responsibility of a bank is to keep the customers

money save and secure. Invest the money in those sectors which will give the

bank highest return. Another main responsibility of eh bank is to provide the

highest return to their share holders. HSBC perform all these responsibility very

well. They get best award as a best cash management bank in ASIA in 2009.

There are no objections about the HSBCs’ responsibility in the banking industry.

Marketing

HSBC marketing strategy is very strong they use handsome amount of money for

advertising. They know it very well that what should be the marketing strategy in

the serving area. They take different types of marketing plans of different area.

HSBC banks have 10,000 affiliates all over the worlds in 120 countries. The

target customers of the different country are different. They set their marketing

plan and strategy according to their target customers. The bank also sponsors of

different social developments programs.

Professionalism

In 2006 and 2007 the revenue of the bank is in increasing trend but in 2008 due

to global recession net income of the bank is going down. But compare to other

world class the bank condition and income is very good. According to the Forbes

Magazine it is world leading bank of the world. So the bank is the most reliable

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bank of the world. the bank employed most professional people and who provide

the best service to the customers.

5.2 Information Technology

HSBC has a world class IT structure and online banking service. The bank

provides online banking services all over the world. One customer of HSBC bank

can easily transfer his fund from India to Australia in a minute. The bank also

provides ATM and credit card facilities to their customers. The customers who

are using internet banking the bank provide special security to them. There

accounts are more secured. The customers use their account from their

country’s bank website. The customers have to maintain the privacy policy fixed

by HSBC bank.

Communication

Communication means connected with internal employees and external

customers and shareholders. Employees of the bank are to share information

with their colleagues. They are also free to make contract personally and

officially to their colleagues. HSBC arrange different types of cultural programs

for their prime customers and colleagues and their family members. In this way

HSBC maintain their communication. The bank also sends souvenirs to their

customers at different religious and cultural occasions.

Freedom of Action

Freedom of action means the employees freedom to take any actions. It is the

right of the employees to participate in the strategy development meeting and

they are free to give their opinion in the meeting. As well as the employee of the

bank are free to discuss any topic to their line manager. They are free to provide

solution to their customer, which is also a good sign of independency of their

customers.

5.3 Censorship on the Internet

It is very important to the customers what kind of information bank share with

others. HSBC maintain a very strong privacy policy for their customers. If a

customer wants a copy of their privacy policy he or she can easily collect the

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policy through the mail from the HSBC. In internet they also maintain a very

strong censorship policy. Here a customer can get only the information of the

products. Only who has the permission of access the account from the online

only they can see the information from the internet. So it can be said that HSBC

has a good censorship policy for the safety of the customers.

5.4 Computers and Work

All kind of banking transaction of the bank is performing through internet. The

bank is maintaining all databases in computer and the employees of the bank

perform their task in computer. The bank has a strong computer network all over

the world. So they can easily share the information from one country to another

in every minute. All kind of financial analysis of the customers is done through

computers. The financial experts are done the task.

5.5 Law

When HSBC bank starts banking in a country it is incorporated as a subsidiary

company of HSBC holding Plc. In several stock exchange its share are traded as

HSBC Holding Plc. It starts banking service as a private bank and follows the rule

and regulation of the parent country. The bank follows the international banking

law and the bank maintains a strong privacy policy for their customers.

5.6 Security

Security of money is a prime conscious of the customers. If the customers do not

fill comfortable they will not deposit their money in the bank. HSBC has 100

million customers all over the world. So HSBC gain the trust of the customers.

The customers of the HSBC believe that, their money will remain secure in the

bank. The bank experts decide in which sectors they will invest the depositors’

money that will give the highest return to them. So the shareholders of the bank

are secure for their share value.

Another meaning of the security of the bank is to secure information of the

customers. HSBC bank has maintained a strong privacy policy for their

customers so there is very low chance to publish any kind of information from

the bank. As well as the bank has a very strong internet censorship program. So,

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only registered customers of the bank can access their information from the

website.

These are all about the ethical practices of the HSBC Bank. So, at the end it can

be said that they maintain their ethical issue very strongly. It is another reason

of their success in the banking industry.

5.7 Brief Description of Spain

Kingdom of Spain is the official name of Spain. It is located in the southern

Europe on the Iberian Peninsula. It is one of the members European Union (EU).

Madrid is the capital city of Spain. Official language is Spanish. Parliamentary

democracy and Constitutional monarchy is the ruling system of Spain. 504,030

square kilometer is the total area of Spain. Euro is the currency name of Spain. In

2008, 46 million people are living in Spain. According to World Bank it is the

ninth largest economy in the world, fifth in the Europe. It is also the third largest

world investors. It is business friendly country. The legal system and other legal

issue are discussed elaborately in below-

5.8 The Legal System

Constitutional Status: The Spanish Constitution of 1978 is the foundation of the

Spanish transition to democracy. It is a constitutional monarchy. Cortes

Generales is the name of its bicameral parliament. Monarch appoints and

nominate the executive branch (consists of a Council of Ministers) presided over

by the President of Government, it is confirmed by the Congress of Deputies

following legislative elections. King Juan Carlos has established political custom

since the ratification of the 1978 Constitution; the most popular parties of the

who nominated by the king seats in the congress.

Origin of Law: The nominated members of the government make the rules and

regulation of Spain. According to the 1978 Spain Constitution Spanish Court

System is governed by the judicial council. It is free from the domination of the

legislative and executive branches of Government.

5.9 Source of Law

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Spanish Constitution should be the source of law. But the historical reasons civil

code regulates the law of the country. There are three types of law. That’s: law,

custom and general principal of law. Spanish legal system is hierarchical. In

below the types of law are given. The rank is higher to lower:

Organic Law

Ordinary Law

Decree-Law

Legislative Decree

Regulation

International Treaties

European Community legislation

5.10 Court Structure

Spanish court structure is hierarchical. Structure of the Spanish court is given in

the next page.

Chart 1: Court Structure of Spain I. Supreme Court: The Supreme Court is the

highest level of justice in the Spanish system. Though it is based in Madrid but its

jurisdiction extends throughout the Spanish territory and over all judicial

matters. Supreme Court is divided into five Chambers-

- Civil

- Criminal

- Social

- Militar and

- Administrative

ii. National Court: National Court has its jurisdiction all over the Spain. It is

located in Madrid. It has three chambers. That’s:

- The Criminal Chamber: the cases involves with royal family, high official,

major drug trafficking are deals in the criminal chamber.

- The Administrative Chamber: in this chamber hires and apples against

ministers and secretaries decision.

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- The Social Chamber: it is bigger than the autonomous committee. It tries

the special process for contesting collective bargaining agreements

applicable to a territory.

-

iii. Regional High Court: This is the highest level of justice within each

autonomous committee. It is divided in to four chambers:

- Civil

- Criminal

- Administrative

- Labor

iv. Provincial Court: the provincial court deals with civil and criminal cases. It is

located in the capital of province. Its jurisdiction extends throughout the

province. It has two portions:

- Civil Section

- Criminal Section

v. Tribunals: Tribunal court is divided into three parts:

- Central Criminal Court

- -Administrative Court

- -CriminalCourt

-

5.11 Different Forms of Business Allowed to Operate and the Laws

Governing Them

Spain is a business friendly country. According to World Bank it is the ninth

largest economy in the world, fifth in the Europe. It is also the third largest world

investors. There are mainly four forms of business organization can be formed in

Spain: that’s

- Sole Proprietorship

- Partnership and

- Company

- corporation

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- Partnership business is two kinds-

- Limited Partnership

- General Partnership

- Company can be formed in

- European Public Limited liability company

- Limited liability company

- New limited liability company

Spain welcomes all foreign investor to invest in the country. The investor need to

meet with some legal requirements to invest in Spain. The legal requirements

are - minimum capital, minimum share holder, and to maintain some legal

corporate obligation.

5.12 Dispute Resolution Procedure

Arbitration is the only procedure which is follow to solve dispute outside of the

court. The procedure is set by the parties in the absence of agreements. The

procedure is set by the arbitrators. The exits cases are not the subject of

arbitration.

5.13 Laws relating to

Copyrights

Spanish copyrights law is set by the Spanish govern. According to the copyright

law the author of literacy, the scientific research documents are protected in the

law. The law is first installed in January 1879. In the time of origination it was

influenced by the French Copyright Law. In 2006 the law was modified and it

approved by the Royal Legislative. The law covers the area of all original works

of literature, science, art, music, and movie.

It is not mandatory that the creator must registered the work but if he registered

the work than that person will get some advantages. It is providing prima facie to

the creator.

Trademarks

New trademarks law enforced in 31 July 2002. According to the law if the

applicant has no third parties then he will take the rights of the trademarks. If

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there is any third party also applicant for the same trademarks then none of the

parties will get the rights of the trademarks. On the other hand if one party apple

for the trademarks earlier than another party then the prior party will get the

registration.

Patents

Patents right is preserved in Spain by the Patents Act 2002. There is also the

Patents Regulations 1953. Royal Legislative is the major persons of patents

related issues. Following purposes are served by this act:

Administration Pattern

Maintaining the patents register.

Providing the patents forms and other applications and documents forms.

Determining the patterns fees.

Receiving the pattern fees.

Publish the pattern in the official journal.

Registering patent attorneys.

Any Spanish person or any foreign neutral person gets the opportunity to patents

his works. Royal Legislative becomes involved in proceedings when an opposition

to the grant of an IP right is filed, when a revocation application is made, or when

a hearing is requested. A panel of Assistant Commissioners (Hearings Officers)

gives decisions on matters referred to the Commissioner for hearing. 

Designs

The Designs Act 2002 is the main law relating to designs in Spain. It is supported

by the Designs Regulations 1954.

Following purposes are served by the Design Act 2002:

Design registers should be maintained.

Power and the function of the design should be defined.

Design and document should be provided.

Determining design fees.

Collecting design fees.

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Commissioner deal with designs issues in the hearing office and this office is the

primary place for judicial cases of deign. Royal Legislative becomes involved in

proceedings when a revocation application is made, or when a hearing is

requested. A panel of Assistant Commissioners (Hearings Officers) gives

decisions on matters referred to the Commissioner for hearing.

Royal Legislative publishes a number of practice guidelines that are used as a

reference tool for examiners of designs. They set out procedural and legal

matters relevant to the examination of applications of Designs under the Act.

5.14 Development in Information, Communication and Technology

HSBC has a very strong IT structure. The bank provides online banking services

to its customers. The bank has a global virtual network. All kind of customers’

information is maintained in the computer. Development of communication is a

major component of the banks. Without time to time development of the

communication technology HSBC will not come in this stage. The bank has

developed its information, communication technology time to time. Now bank

delivers four basic products in its all branches. Internet banking is one of them.

HSBC is one of the pioneers in internet banking. Upgradation of communication

technology is a regular work of HSBC.

Culture

According to John D. Daniels, Lee H. Radebaugh and Daniel P. Sullivan states that

Culture refers to the learned norms based on attitudes, values, and beliefs of a

group of people. In the age of globalization culture play an important role for the

multinational organization like HSBC. 325,000 employees in 85 countries work in

HSBC. These people have different culture. HSBC shows respect to their culture.

They design the organization culture in this way that they can follow the rules

and regulation to their own country. These are all about the external

environment of the HSBC. Internal environment of HSBC is also very flexible. The

employees in the organization are free to make contact with its other colleagues

in other country. They can easily share their ideas and point of views with their

foreign colleagues and their line managers. HSBC is one of the banks who

maintain their work life balance policy very strongly. Flexibility, good training

and development program, attractive salary and strong corporate culture are the

reasons of HSBC success.

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Power

According to Bloomberg, "HSBC is one of world’s strongest banks by some

measures.” It is one of the most powerful financial institutions of the world. HSBC

is the parent company of Hong Kong. It plays very important role in Hong Kong

economy. So it can be said that it influenced the economic policy in Hong Kong.

In US and in UK HSBC is one of the leading banks. It helps the government to

make policy that is related to business for foreign country.

In South Asia the bank works as foreign multinational bank. They influence the

government to making foreign banking policy. In some countries HSBC provide

fund to the government or lend money to the government such as- Bangladesh.

In these countries bank can easily influence the government to making policy

that will help the bank.

Politics

Political stability is very important for the development of a business

organization. It is very good advantage for the HSBC that, the main two countries

in US and UK from where they mainly operated its worldwide banking business,

have very strong democratic system. The bank operated in 86 countries. All of

these countries political system are not same. In some countries political system

is very unstable, such as –Pakistan. In some countries political power of those

countries are not favorable for HSBC. Global political and economic crisis like-

World war and world rescission also play very important role in case of

multinational company like –HSBC. HSBC provides banking services all over the

world. Now it is age of communication and technology. So any political crisis of a

particular country is not play very important role in the total business of a

multinational company. On the other hand it is very good for the HSBC that they

did not have to face any major political crisis in the recent decades.

Law

As a global company it also follows the laws of all countries where it operates. Its

local operations are totally controlled according to local banking rules and

regulations. HSBC is always respectful to laws because without showing respect

on laws it is impossible to be a socially responsible banking institution. In every

country where the banks operated its banking services follow the rules set by its

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central bank. The bank also follows separate law and terms condition for its

website and internet banking. HSBC maintain strong privacy rules for their

customers. They do not publish any information to other company without

permission of the customers. In case of internet banking the bank provide

selected information to the customers. It is the motto of the HSBC that they

follow the rules and regulation and the being the social responsible company of

the country.

Choice

People come to the bank mainly for two purposed; one is to deposit their money

and other is borrowing fund from the bank. So the banks arrange their products

and services according to the customers’ choice. HSBC provides banking services

to 100 million people all over the world. They arrange the products according to

the choice if the customers. HSBC respects the customers’ choice. So, bank

diversified the products according to the customers need.

The main four products of the HSBC are-

Personal Financial Service (including commercial finance)

Commercial banking

Global Banking and Markets and

Private Banking

There are also some sub products for the HSBC. So, when customers come to the

bank he or she gets services according to his needs.

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[PART B]

6.0 MONEY LAUNDERING

Staring out with one small bank HSBC grew into one of the world's most

successful and largest banks. The bank was first opened in Hong Kong in March

of 1865 with the help of a man named Thomas Sutherland. The bank now

consists of four global businesses that include, retail banking and wealth

management, commercial banking, Global banking and markets, and Global

Private banking. These four global businesses serve 89 million people throughout

85 different countries and 6 different regions. HSBC's headquarters are located

in London.

        

In 2012 HSBC was accused of money laundering through mexican drug

cartel and other with possible links to terrorist groups. Money laundering is the

process of covering up the proceeds of a crime so it cannot be linked to the

wrongdoing. It was found that HSBC has been transferring $7 billion in banknotes

from its Mexican to its U.S subsidiaries. Much of this $7 billion was drug related.

Their failures also went as far as dealing with bank Al Rajhi in Saudi Arabia that

was linked to the financing of terrorist groups. The bank failed to monitor $58

trillion of money moving across boarders and through their branches. HSBC now

faces 1.9 billion dollars in fines and penalties that they have agreed to pay to

avoid more serious consequences. The bank will be on probation for the next 5

years and need to make sure that they do not allow anything like this to happen

again. If they fail to follow these conditions then the case can be reopened and

criminal indictment can be charged. Under all of the theories which include,

individualism, utilitarian, kantianism, and virtue, HSBC is not acting ethically. 

6.1 Individualism Theory

Individualism is the moral stance, political philosophy, ideology, or social outlook

that emphasizes the moral worth of the individual. Individualists promote the

exercise of one's goals and desires and so value independence and self-reliance

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and advocate that interests of the individual should achieve precedence over the

state or a social group, while opposing external interference upon one's own

interests by society or institutions such as the government.

Individualism makes the individual its focus and so starts "with the

fundamental premise that the human individual is of primary importance in the

struggle for liberation.” Liberalism, existentialism and anarchism are examples of

movements that take the human individual as a central unit of analysis.

Individualism thus involves "the right of the individual to freedom and self-

realization".

It has also been used as a term denoting "The quality of being an

individual; individuality” related to possessing "An individual characteristic; a

quirk." Individualism is thus also associated with artistic and bohemian interests

and lifestyles where there is a tendency towards self-creation and

experimentation as opposed to tradition or popular mass opinions and behaviors

as so also with humanist philosophical positions and ethics.

The individualism theory states that the most important thing is to

maximize profit and maximize the well being of the company. However, they

need to do so within the limitation of the law and peoples rights. originally HSBC

intended to maximize their profits by allowing people to launder money through

their bank branches and to make this go unnoticed. However they got caught

breaking the law and ended up doing the opposite of maximizing their profits

and the company's wellbeing. They ended agreeing to pay 1.9 billion dollars in

fines, which was the largest fine to ever be imposed on a bank. Not only will they

be losing lot of money but they will also be losing the respect and trust of many

people including investors and customers. This is definitely not maximizing the

wellbeing of the company. Even though they were attempting to maximize their

profits they were doing so by breaking the law which makes what HSBC did

unethical by this standard. 

6.2 Utilitarian Theory

Utilitarianism is a theory in normative ethics holding that the proper course of

action is the one that maximizes utility, usually defined as maximizing happiness

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and reducing suffering. Classic utilitarianism's two most influential contributors

are Jeremy Bentham and John Stuart Mill. John Stuart Mill in his book

Utilitarianism, stated, "In the golden rule of Jesus of Nazareth, we read the

complete spirit of the ethics of utility. To do as one would be done by, and to

love one's neighbor as oneself, constitute the ideal perfection of utilitarian

morality." According to Bentham and Mill, Utilitarianism is hedonistic only when

the result of an action has no decidedly negative impact on others. It is now

generally taken to be a form of consequentialism, although when Anscombe first

introduced that term it was to distinguish between "old-fashioned Utilitarianism"

and consequentialism.

In utilitarianism, the moral worth of an action is determined only by its

resulting outcome, although there is debate over how much consideration should

be given to actual consequences, foreseen consequences and intended

consequences. In A Fragment on Government, Bentham says, "it is the greatest

happiness of the greatest number that is the measure of right and wrong" and

describes this as a fundamental axiom. In An Introduction to the Principles of

Morals and Legislation, he talks of "the principle of utility" but later prefers "the

greatest happiness principle."

Utilitarianism can be characterized as a quantitative and reductionist

approach to ethics. It is a type of naturalism. It can be contrasted with

deontological ethics, which does not regard the consequences of an act as a

determinant of its moral worth; virtue ethics, which primarily focuses on acts and

habits leading to happiness; pragmatic ethics; as well as with ethical egoism and

other varieties of consequentialism.

Utilitarianism is influential in political philosophy. Bentham and Mill

believed that a utilitarian government was achievable through democracy. Mill

thought that despotism was also justifiable through utilitarianism as a

transitional phase towards more democratic forms of governance. As an

advocate of liberalism, Mill stressed the relationship between utilitarianism and

individualism.

The Utilitarian theory believes that companies should try and maximize

the happiness of the majority of the people and their stakeholders. They believe

that happiness is the most important thing. The stakeholders in the case with

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HSBC would be the employees, customers and investors of the bank. This theory

tells us that we should be able to tell the ethical significance of any action by

looking at the consequences. In this case if you look at the consequences you

can tell that it is both unethical and the majority of the people are definitely not

happy. They had to pay large fines, be on probation, and lost peoples trust. I

think its safe to say no one would be happy with an outcome like this. The

employees end up unhappy because many of them lost jobs and or bonuses,

even people who have been with the company for as much as 20 years got fired

or were forced to resign. Customers and investors were not happy because they

trusted in the bank and the bank broke the law and was dishonest with many

people. Once a company has that attached to them its hard to gain back trust

and also get the respect of their new customers and investors. For all of these

reasons the greater number does not end up happy and this scandal is not

ethical by this perspective either. 

6.3 Kantianism Theory

Kantian ethics is a deontological ethical theory first proposed by German

philosopher Immanuel Kant. The theory, developed as a result of Enlightenment

rationalism, is based on the view that the only intrinsically good thing is a good

will; therefore an action can only be good if its maxim, the principle behind it, is

duty to the moral law. Central to Kant's construction of the moral law is the

categorical imperative, which acts on all people, regardless of their interests or

desires. Kant formulated the categorical imperative in various ways. His principle

of universal ability requires that, for an action to be permissible, it must be

possible to apply it to all people without a contradiction occurring. His

formulation of humanity as an ends in itself requires that humans are never

treated merely as a means to an end, but always also as ends in themselves. The

formulation of autonomy concludes that rational agents are bound to the moral

law by their own will, and Kant's Kingdom of Ends requires that people must act

as if the principles of their actions establish a law for a hypothetical kingdom of

ends. Kant also distinguished between perfect and imperfect duties. A perfect

duty, such as the duty not to lie, always holds true; an imperfect duty, such as

the duty to give to charity, can be made flexible and applied in particular times

and places.

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American philosopher Louis Pojman has cited Pietism, political philosopher

Jean-Jacques Rousseau, the contemporary debate between rationalism and

empiricism, and the influence of natural law as influences on the development of

Kant's ethics. Other philosophers have argued that Kant's parents and his

teacher, Martin Knutzen, influenced his ethics. Those influenced by Kantian

ethics include philosopher Jurgen Habermas, political philosopher John Rawls,

and psychoanalyst Jacques Lacan. German philosopher G.W.F. Hegel criticised

Kant for not providing specific enough detail in his moral theory to affect

decision-making and for denying human nature. German philosopher Arthur

Schopenhauer argued that ethics should attempt to describe how people behave

and criticised Kant for being prescriptive. Michael Stocker has argued that acting

out of duty can diminish other moral motivations, such as friendship; Marcia

Baron has defended the theory by arguing that duty does not diminish other

motivations. The Catholic Church has criticised Kant's ethics as contradictory and

regards Christian ethics as more compatible with virtue ethics than Kantian

ethics.

The claim that all humans are due dignity and respect as autonomous

agents means that medical professionals should be happy for their treatments to

be performed upon anyone, and that patients must never be treated merely as

useful for society. Kant's approach to sexual ethics emerged from his view that

humans should never be used merely as a means to an end, leading him to

regard sexual activity as degrading and to condemn certain specific sexual

practices. Feminist philosophers have used Kantian ethics to condemn practices

such as prostitution and pornography because they do not treat women as ends.

Kant also believed that, because animals do not possess rationality, we cannot

have duties to them except indirect duties not to develop immoral dispositions

through cruelty towards them. Kant used the example of lying as an application

of his ethics: because there is a perfect duty to tell the truth, we must never lie,

even if it seems that lying would bring about better consequences than telling

the truth.

       The next theory is the Kantianism theory. When talking about this theory

there are four basic principles that are involved. These principles are that

companies should act rationally, allow and help people to make rational

decisions, respect people, and be motivated by good will. HSBC did none of

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these things. They acted very selfishly and did not make rational choices. It is

clearly not rational to allow dangerous people such as drug dealers launder

money through their bank. They were not thinking about all of the parties

involved or what the consequences could potentially be when they chose to look

the other way on this issue. Another part of the Kantianism theory is the three

formulas that it consists of. These formulas include, The formula of universal law,

the formula of humanity and the formula of autonomy. The formula of universal

law states that companies should act only on the maximum whereby you can at

the same time will that it becomes universal law. This law prohibits people from

making exceptions of themselves. However, that is exactly what HSBC did. They

knew money laundering was illegal but made an exception for themselves that is

was okay to do so. Therefore this is another theory that HSBC would seem

unethical according too. 

      

6.4 Virtue Theory

Virtue ethics emphasizes the role of one's character and the virtues that one's

character embodies for determining or evaluating ethical behavior. Virtue ethics

is one of the three major approaches to normative ethics, often contrasted to

deontology which emphasizes duty to rules and consequentalism which derives

rightness or wrongness from the outcome of the act itself.

The difference between these three approaches to morality tends to lie

more in the way of how moral dilemmas are approached, rather than in the

moral conclusions reached. For example, a consequentialist may argue that lying

is wrong because of the negative consequences produced by lying—though a

consequentialist may allow that certain foreseeable consequences might make

lying acceptable. A deontologist might argue that lying is always wrong,

regardless of any potential "good" that might come from lying. A virtue ethicist,

however, would focus less on lying in any particular instance and instead

consider what a decision to tell a lie or not tell a lie said about one's character

and moral behavior. As such, lying would be made in a case-by-case basis that

would be based on factors such as personal benefit, group benefit, and

intentions (as to whether they are benevolent or malevolent).

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A person's character is the totality of his character traits. Our character

traits can be good, bad or somewhere in between. They can be admirable or not.

The admirable character traits, the marks of perfection in character, are called

virtues, their opposites are vices.

Character traits are:

dispositions or habit-like tendencies that are deeply entrenched or

engrained. They have been referred to as second nature--"first nature"

referring to tendencies with which we are born. Character traits are not

innate--we were not born with them. Thus infants are neither virtuous nor

vicious.

formed as a result of more or less freely selected actions of a certain kind.

We are not born honest or liars, but we become so by repeatedly telling

the truth or by repeatedly lying.

Moral Virtues are:

are admirable character traits; generally desirable dispositions, which

contribute, among other things, to social harmony

Craft knowledge is a technical virtue specific to a particular line of

work (rhetoric or the art of effective persuasion, the housebuilder's

art, the computer programmer's art, the accountant's art). The

moral virtues have a more general scope.

enable us to act in accordance with reason

You cannot be morally reasonable in the fullest sense, you cannot

have the virtue called prudence, unless you are morally virtuous.

The person who is not morally virtuous is sometimes ruled by his or

her appetites or passions. Her emotions get in the way of doing the

reasonable thing or even recognizing what the reasonable thing

might be.

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enable us to feel appropriately and have the right intention

The person whose character is less than virtuous may do what

looks, from the outside, like the right thing to do, but her motives

will leave something to be desired. A truthful person will usually tell

the truth, and he will do so because it is the right thing to do, not

because he fears the negative consequences of being found out.

are orientations towards the mean, rather than the extremes (vices relate

to extremes).

In Aristotle's famous study of character, a frequent theme is the fact

that a virtue lies between two vices. The virtue of courage, for

example, lies between the vices of rashness and cowardice. The

coward has too much fear, or fear when he should have none. The

rash person has too little fear and excessive confidence. The

courageous person has the right amount.

While courage is the virtue related to the emotions of fear and confidence,

mildness is the virtue related to anger. A person who gets angry too quickly will

be irascible; a person who never gets angry, even when she should, is inirascible

(the term does not matter). The virtuous person will get angry when she should,

but not excessively and not contrary to reason. Aristotle calls the virtue of

appropriate anger mildness or gentleness.

  HSBC showed that they did not have or use any of these virtues in a

positive way in this case. They did the opposite. I guess in a way you could say

they had courage because they let these things go on and they broke the law.

However, they did not have good courage or courage to stick up for the right

thing to do. This theory, like the previous ones would not agree with HSBC and

would not accept them or think they were ethical. In my opinion I do not agree

with what HSBC did or think that it was ethical by any means. They broke the law

and allowed dangerous people to launder money. However I do think that it was

respectable for them to apologize and take responsibility for their wring doings.

They are taking to right steps to move forward in their business and make sure

this doesn't happen again. They formed new management teams and spent

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extra money on improving their anti-money laundering systems. This goes to

show that people and businesses can make mistakes but can also bounce back

from them is they do the right things from then on out. This proves how far HSBC

has come so far which also shows on how much they will continue to grow in the

future.

    

The action plan for HSBC is actually pretty simple. They allowed money

laundering to go on through their bank. They will need to first apologize to the

public and pay their fines as well as fire and hire new management teams that

will run the company better and more ethical. HSBC's mission statement should

be "Our mission is to be one of the biggest and most successful banks in the

world, while continuing to grow and develop as well as doing so in a respectful

and honest manner”. They should also have a set of core values that they run

their company by. I think that these core values should be honesty, integrity,

ingenuity and hard work. I believe if they follow both these core values and the

mission statement then they will be very successful and be able to monitor

future issues. If they do all these things and make the appropriate fires/hires and

follow their main values then they will be able to ensure ethical productivity. 

7.0 CULTURAL INSENSITIVITY

7.1 HSBC Embroiled In 'Slit-Eye Row' Over Advert

HSBC has become embroiled in a race row after it dressed up an overweight

white man to look like a Japanese sumo wrestler for its latest advert.

HSBC, which calls itself 'the world's local bank', is running a series of billboard

and print advertisements featuring the wrestler alongside the slogan: 'Fixed

savings rates that won't budge.'

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The model called Brian, who stars in the bank's commercial with the tag line

"Fixed savings rates that won't budge", had his skin darkened and is wearing

make-up that makes his eyes look narrower, it has been claimed. He is pictured

in a Japanese-style wig and a traditional mawashi belt.

The controversy comes after the Spanish Olympic basketball team sparked fury

in China after appearing in newspaper adverts posing while making "slit-eyed"

gestures. Both the men's and women's teams were pictured smiling as they

pulled back the skin on the side of their eyes, in a crude impersonation of

Chinese people.

Days later a photo showing four members of Argentina's Olympic women's

football team pulling the same pose emerged on the internet. Although there

was no suggestion that any of the athletes intended to cause offence, the rows

sparked by the photos have highlighted how standards about the acceptability of

racial stereotyping vary widely between countries, even in the West.

Now HSBC, which calls itself "the world's local bank", has been accused by

members of Britain's Japanese community of being "culturally insensitive".

Godfrey King, director of the Anglo-Japanese Society of Wessex, said: "The fact

that the picture depicts a sumo wrestler who is not actually a sumo wrestler, but

has been made up to look like one, would be considered a high insult to the

Japanese community. It is culturally insensitive.

"It has insulted the honour of our nation."

HSBC said that the Sumo wrestler was not meant to look like he came from a

specific country but admitted that make-up had been applied to his face and

eyes and that his skin tone had been made to appear more tanned.

A spokesperson said: "The only make-up and post-production applied is to even

up our model's natural suntan from his arms and neck-line all over his body.

Sumo wrestlers come from all over the world and the sport is particularly popular

in central Europe right now.

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"It's standard photography make-up - not to alter the ethnicity of the model in

any way."

Sumo wrestling, which began in a competitive form in the 16th century as a

performance to entertain the Shinto gods, is Japan's national sport. It attracts

wrestlers from all over the world but the current grand champion is originally

from Mongolia.

8.0 A TALE OF TWO LIARS

There were two great liars in a town and the town management decided to

organize a competition during the annual fund raising dinner so that the two liars

could entertain the crowd and also outwit each other. The first liar boasted that

his great grandfather owned the biggest stable in the world where all the world’s

animals could be easily accommodated and still there would be ample space.

The second liar interrupted and declared that the stable was nothing compared

to the unique sword which his great grandfather owned. The sword which easily

reached the sky line, was used by his great grandfather every morning to pierce

the clouds causing a huge rainfall so that he could take a nice shower. The first

liar not to be overshadowed immediately inquired as to where the big sword was

stored when not in use. The second liar replied that it was stored in your

grandfather’s stable. The whole crowd was swept on their feet by the reply.

Two legends of today’s banking industry – one is Sir John Bond, Who is the

Chairman of the HSBC Banking Group, which is the largest banking group in the

UK. The other is His Excellency Sultan Suwedi, the Governor of UAE Central Bank.

Both command enormous power but unfortunately ran into a simple god fearing

and straightforward auditor. At one of the breakfast meeting organized by KPMG,

Sir John declared that he wears two hats – one as the Chairman of HSBC the

giant banking group and the other as the Chairman of the Institute of

International Finance in Washington whose members are all top banks in the

world.

The Bank of Credit and Commerce (BCCI), some 77% owned by the ruler of Abu

Dhabi, was penalized heavily for laundering some $ 14.0 million in the U.S. and

here HSBC bank launders some $ 343. 0 million in just one bank account and still

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gets all the banking awards every year. Sultan would have become a hero

overnight in the banking world and would have been worshipped like a god in the

Arab Banking World. But this glory was not to be his and now finds him self in all

sorts of trouble. The banking industry to whom he played a host in September

2003, when the galaxy of bankers from around the globe attended the 58 th

Annual meeting of the IMF and World Bank in Dubai will face series of questions-

Was he bribed by HSBC? If yes, then how much and in what currency and how

did they do it? Is he going to go behind the bars?

Sultan, who has been the Governer for the last 14 years or so, has more faith in

the Hawala system of remittance than his own banking system – a very sorry

state of affairs, indeed, and has been hosting the International Hawala

Conference every year to throw wool in the eyes of banking communities.

According to him, Hawala is a very old system of remittance and is justified.

Somebody should tell him that prostitution is also the oldest profession, but is

banned by most of the civilized countries just as Hawala is banned by most of

the countries around the world. During audits of various exchange houses in the

UAE, it is known that drug dealers used Hawala and Hawala deals to Iraq during

Saddam Hussain’s regime were violating U.S./U.N. Sanctions. The U.S. Authorities

based on their findings that it has been extensively used by terrorist

organizations, have announced that they would go after the hawalwallas in the

Middle East. After terminating the employment of the auditor Sultan sent a

circular to all banks in the UAE saying – His accusations are baseless and

fabrications while HSBC Management declared that everything was fine and

normal at HSBC Middle East and He was simply taking a revenge on HSBC. In his

various interviews, Sultan has often declared that ‘there is no money laundering

in the UAE. It is a product of western countries where organized crimes thrive.”

Bond, on the other hand, in his reports, talks about honesty and integrity being

the pillars of HSBC. U can decide who is a better liar Sultan Suwedi or john Bond.

9.0 HSBC HISTORY WALL

Located on the ground floor of its head quarters in London is HSBC’s history wall,

which comprises of nearly 4000 pictures depicting important events in the

Groups history around the world. Here one can explore HSBC’s history of 140

years or so in pictures. The group traces its roots to the beginning of 1865 in

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China. Investors quickly took up its first IPO of HK $5 million. In short span, HSBC

was acting as a banker to the Hong Kong government and also as sole banker to

the British Government accounts in China, Japan, Penang and Singapore. In

1997, when Hong Kong was to become a part of Chine, they made a clever move

to establish a holding company in the UK and acquire Midland bank. This

strategic move ensured that the bank got a tag as UK based entity. The bank

started to become a bigger player by acquiring banks around the world, but

some of its acquisitions, like Republic national Bank (RNB) in the U.S., raised

eyebrows.

Edmond Safra, the charismatic owner of Republic, who was expected to play a

major role post acquisition, was mysteriously murdered in Monte Carlo, where

according to reports, he was to meet Sir john Bond. Safra had collaborated with

the FBI to expose the Russian Mafia’s international money laundering operations

in the U.S. Safra, one of the richest but most controversial bankers of his time,

was obsessed with security. He had a battery of bodyguards with machine guns

surrounding him, but on that fateful night, not even one of the bodyguards was

on duty. One of his male nurses was made the scapegoat and his murder

remains a mystery. Celebrities attended his burial ceremony and Sir Bond gave

the main eulogy. Safra had described Sir Bond as a great banker to whom he had

entrusted his bank. Today, HSBC is the biggest bank in Europe and ranks among

the top five in the world.

Nevertheless financial experts have been critical of HSBC’s operations. Executive

Intelligence Review (EIR), in one of its articles published in the February 1, 2002

issue, describes HSBC as the flagship bank of the global drug trafficking

enterprise, properly known as the Dope, Inc. per EIR, the bank served as the

backbone of the financial network of the British East India Company and financed

London’s opium wars against China in the 19th Century. Since that time, it has

served as a kind of discount facility for laundering dirty money from the drug,

gold and diamond trade. The brave editor of EIR continues to live a life of

threats.

Another daring reporter, Vernon Silver from Bloomberg News (in an article dated

May 31, 2005) has heavily criticized HSBC’s policy of collecting deposits and

profits in the U.S. and lending tons of money in countries like Iran, Syria and

Page | 65

Sudan, which the U.S. Administration says sponsors terrorism. Its lending

operations to Iranian state-owned entities has come under fire and noting the

current Iran and U.S. showdown, many lawmakers in the U.S. are unanimous in

their agreement that entities tha do business with countries that sponsor

terrorism should be boycotted and shown the door. It amounts to trading with

the enemy and feeds oxygen to the terrorism pipeline.

Yet another honest reporter, Glen Simpson from the Wall Street Journal reported

an audit finding on the front page of its European Edition of September 17, 2003,

about the controversial bank account of a mysterious salesman at HSBC Dubai

having an annual turnover of $343 million and the notorious arms dealer, Victor

Bout’s web of accounts at HSBC Sharjah. Simpson was to write a series of

articles on HSBC’s UAE operations, but it seems the series was remote controlled

to keep it quiet.

The author, who was the former Chief Examiner of the UAE Central Bank had

picked up that HSBC was running a devil’s workshop in the UAE. Post 9/11 Sultan

Suwedi, who had midway stopped an audit, reported to media that Marwan Al

Shhehai, who as per U.S. authorities was part of the pilot of United Airlines flight

175, the second plane to hit WTC 2 South Tower on September 11, was banking

with HSBC in the Emirates.

Sir Bond, who is a highly rated banker in the modern banking world, has a history

and character like the Pied Piper. Bond is merely a high school pass out who tried

to get into a University, but was turned down. He went to a school in America on

an exchange program and got a job cleaning decks on a ship (according to a

CNN interview dated June 06, 200). Well, the cleaning boy, now in his mid sixties,

has graduated and mastered the art of cleaning the world’s dirty money, and is

seen giving lectures to students around the world on fancy topics like “Putting

Theory into Practice” and “Social Responsibilities & Ethics.” He should have

resigned when I had picked up that their bank was involved in moving millions in

unexplained and unknown funds for questionable undisclosed customers. The

Chairman of a small bank in India called Charminar Bank shot himself in his

office when his bank was involved in a scandal. The Bank, which was operating in

the historical city of Hyderabad (where the heart of HSBC’s back office operation

Page | 66

is based), was recently visited by Bond and his team, but unfortunately, the

tradition of the captain taking the blame was not learned.

At HSBC, Bond is regarded as a ruthless cost cutter, a quality he shares with

Sultan Suweidi. About his personal private life, Bond had once remarked, “I am

married with three children and am dog-thoroughly-boring,” and in one of his

interviews, has attributed his success to sheer “good luck.” Well my dear, your

luck has finally deserted you at the end of your career. I sincerely hope you

remain married and your children stand behind you in support, or hide

themselves from the world by standing behind you.

10.0 BANKER TO TERRORIST ORGANIZATIONS

Post 9/11, the U.S. authorities issued list of terrorist organizations, and banks all

over the world were asked to identify and freeze bank accounts connected with

terrorists. HSBC UAE Branches have admitted that they do maintain bank

accounts for such terrorist oraganizations. It is rather surprising that despite our

criticism, the Know Your Customer (KYC) policy is still not being strictly

implemented. HSBC staff is more concerned at opening new bank accounts to

take advantage of the incentive policy associated with booking new clients at the

Bank. Sultan who was increasingly turning a blind eye on HSBC’s Middle East

operations did not allow us to review these accounts, which would have given us

some trail on the remitters and end beneficiaries.

Based on the scarce information provided by them, the inward transfers

originated from Al Baraka Exchange in Oslo and Brakat Exchange in Vancouver,

and carried messages like ‘Help for Somalia’, ‘Aid for Somalia’, and ‘Support for

Somalians’. HSBC reported these accounts only when the U.S. authorities were

on the lookout for terrorist related accounts and did not volunteer to inform the

Central Bank despite being aware of the above disturbing messages

accompanying the inward remittances.

Following the 9/11 attack on America, President Bush had issued an Executive

Order freezing the assets of individuals and organizations that support terrorism.

Al Baraka Group, owned by Somalis and having major operations in Dubai, was

accused of transferring profits and interest to Al Qaeda. The U.S. Authorities

Page | 67

seized funds belonging to the group under the new Patriot Act. U.S. investigators

believe that Barakat, a financial and telecommunications

Conglomerate operating in many countries around the globe, has pumped

millions and millions of dollars to Osama bin Laden’s Al Qaeda organization. Paul

O’Neil, the U.S. Treasury secretary, nicknamed the group as a “Hawala

Conglomerate”. U.S. authorities had raised Al Baraka Exchange and forced the

Central Bank to close this entity immediately. UAE Central Bank must be

pressured to allow international investigators unhindered access to conduct a

post mortem of such accounts, so as to pierce the veil of persons hiding behind

these accounts and prosecute them.

In one of his press interviews, John Bond admitted that, “We are human

organization and make mistakes. Even at my age, I make mistakes every single

day.” Well, my dear Bond, your mistakes can result in another 9/11 or 7/7

terrorist attack. Remember, only 007 James Bond has a license to kill, and that

only in the movies. Incidentally, in 1911, a movie directed by Charles J. Brabin

was made titled The Awakening of John Bond. I am afraid our Sir Bond will never

be awakened.

11.0 LINK TO ARMS TRADE

In December 2008 the British anti-poverty charity War on Want released a report

documenting the extent to which HSBC and other UK commercial banks invest in,

provide banking services for and make loans to arms companies. The charity

writes in its report that HSBC holds shares in the global arms industry totaling

£450.6 million, and serves as principal banker for Meggitt, the UK's largest arms

company. The report also details HSBC's dealings with known producers

of cluster munitions and depleted uranium.

Its reported that HSBC earned a total of £657.3m in profits for bank services

provided to Textron, a US industrial firm that makes cluster bombs. In fact, the

figure was in dollars and was not a profit: HSBC underwrote $657.3m in Textron

share and bond offerings. The bank is not disclosing the profits made from these

services or from the lending of $150m to Textron.

Page | 68

The deadly trade in cluster bombs is funded by the world's biggest banks who

have loaned or arranged finance worth $20bn (£12.5bn) to firms producing the

controversial weapons, despite growing international efforts to ban them.

HSBC, led by ordained Anglican priest Stephen Green, has profited more than

any other institution from companies that manufacture cluster bombs. The

British bank, based at Canary Wharf, has earned a total of £657.3m in fees

arranging bonds and share offerings for Textron, which makes cluster munitions

described by the US company as "leaving a clean battlefield".

Campaigners maintain the deadly weapons can explode years after combat,

killing or maiming innocent people.

HSBC will face protests outside its London headquarters today. Goldman Sachs,

Bank of America, JP Morgan and UK-based Barclays Bank are also named among

the worst banks in a detailed 126-page report by Dutch and Belgian campaign

groups IKV Pax Christi and Netwerk Vlaanderen.

Goldman Sachs, the US bank which made £3.19bn proft in just three months,

earned $588.82m for bank services and lent $250m to Alliant Techsystems and

Textron.

Of the banks named, only Barclays was prepared to comment. It said: "Barclays

group provides financial services to the defence sector within a specific policy

framework. It is our policy not to finance trade in nuclear, chemical, biological or

other weapons of mass destruction.

"Our policy also explicitly prohibits financing trade in landmines, cluster bombs

or any equipment designed to be used as an instrument of torture." A

spokeswoman added that Barclays had supplied money to Textron, which makes

cluster bombs, but that the US firm was a broad-based weapons manufacturer.

Last December 90 countries, including the UK, committed themselves to banning

cluster bombs by next year. But the US was not one of them. So far 23 countries

have ratified the convention. The UK has yet to do so, but the Foreign Office

confirmed that it would form part of the government's legislative programme

before the next election.

A Foreign Office spokesman said the tightest export control order had been

placed on cluster bombs, which extended to banks supplying money to

Page | 69

manufacturers. The government was aware the control order was not working

and "is working on it".

Esther Vandenbroucke, of Netwerk Vlaanderen and one of the report's authors,

said: "The responsibility to ban cluster munitions is a shared responsibility. It

requires courage, and it requires an effort. We are just months away from an

international treaty entering into force and it is time for signatory states to the

Convention on Cluster Munitions for non-signatory states and for financial

institutions to act now."

Last December, the New Zealand government's pension fund sold shares in

Lockheed Martin because of its link to the manufacture of cluster bombs. Similar

actions have been taken by the Irish and Dutch governments.

Millions of people will be endangered by up to tens of millions of cluster bomblets

that have not yet exploded, causing lasting economic and social harm to

communities in more than 20 countries for decades to come, campaigners have

warned. The vast majority of cluster bomb casualties occur while victims are

carrying on their daily lives.

On Monday, a Lebanese 20-year-old man had his leg amputated after a cluster

bomb exploded in southern Lebanon Houla village. A security source said he was

collecting wood in his border village when the explosion occurred.

The Israeli army made extensisve use of cluster bombs during the war in south

Lebanon three years ago. Cluster bombs were most recently used by both the

Georgians and the Russians in the dispute over South Ossetia. They were also

used in the Iraq and Afghanistan invasions.

British banking giant HSBC agreed to pay a record $1.92 billion settlement

Tuesday after a broad investigation by U.S. federal and state authorities found

the bank violated federal laws by laundering money from Mexican drug

trafficking and processing banned transactions on behalf of Iran, Libya, Sudan

and Burma .

The settlement, a combination of forfeitures and civil penalties, shows the

London-headquartered financial powerhouse for years deliberately channeled

hundreds of millions of dollars of the prohibited transactions through its U.S.

arm.

Page | 70

"HSBC is being held accountable for stunning failures of oversight — and worse

— that led the bank to permit narcotics traffickers and others to launder millions

of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more

in transactions with sanctioned countries," said U.S. Assistant Attorney General

Lanny Breuer in announcing the largest settlement of its kind.

"The record of dysfunction that prevailed at HSBC for many years was

astonishing," said Breuer.

The settlement, part of a deferred prosecution agreement filed in Brooklyn

federal court, means HSBC avoids a criminal conviction on money laundering and

other major charges — which could have amounted to a financial death sentence

by blocking the bank's access to the U.S. banking system.

The settlement is the latest and largest of several deals U.S. authorities have

reached with other banks over similar allegations. Federal and state prosecutors

retain legal power to prosecute HSBC if the bank fails to comply with banking

and oversight reforms included in the agreement, including the appointment of

an independent monitor.

"We accept responsibility for our past mistakes. We have said we are profoundly

sorry for them, and we do so again," HSBC Group Chief Executive Stuart Gulliver

said in a statement earlier Tuesday.

Adding that the bank had cooperated with U.S. investigators, Gulliver said "we

have been taking concrete steps to put right what went wrong."

He said the deferred prosecution agreement notes that in recent years the bank

has increased spending and staffing on money-laundering prevention and beefed

up know-your-customer efforts.

HSBC spent more than $290 million to improve its money-laundering prevention

policies, terminated 109 banking correspondent relationships considered

potential money laundering risks and required a number of senior bank officers

to return previously paid bonuses, Gulliver said.

The agreement covers an investigation that involved the Department of Justice,

the Manhattan District Attorney in New York, the Federal Reserve, the Treasury

Page | 71

Department's Office of Foreign Assets Control and its financial crimes

enforcement unit, and the Comptroller of the Currency.

HSBC shares were up 0.5% to $51.82 in afternoon trading Tuesday. The shares

also traded higher in London.

"Obviously, $1.9 billion is a very large number, but it's very manageable" without

affecting HSBC's bottom line, said Ian Gordon, head of bank research for Investec

Securities in London. "It's clearly within market expectations."

Some legal analysts questioned U.S. authorities' failure to force HSBC to plead

guilty to criminal charges. Although federal officials said the settlement was

based on the bank's cooperation and renewed efforts to fight money laundering,

the analysts said a criminal plea would have sent a powerful deterrence message

to the banking industry.

"It's fine that HSBC's CEO talked about accepting responsibility, but when will he

be held accountable for this tremendous breach of trust?" asked Mark Rifkin, a

New York shareholder rights attorney and partner at the Wolf Haldenstein Adler

Freeman & Herz law firm.

The federal court filings outlined the prohibited transgressions in dramatic detail.

Between 2006 and 2010, the Mexico's Sinaloa Cartel, Colombia's Norte del Valle

Cartel and other alleged drug traffickers laundered at least $881 million in illegal

proceeds through accounts in HSBC's U.S. arm, the filings show.

"These traffickers didn't have to try very hard," said Breuer. "They would

sometimes deposit hundreds of thousands of dollars in cash, in a single day, into

a single account, using boxes designed to fit the precise dimensions of the teller

windows in HSBC Mexico's branches."

Similarly, HSBC bankers as far back as 2001 cleared U.S. dollar transactions

through the bank's U.S. arm while hiding the fact that the money was linked to

Iran's Bank Melli. A June 2001 email from an HSBC relationship manager in

Europe wrote that Bank Melli had been instructed not to input an "Iranian

referenced customer name" with the transaction, thus avoiding any sign of a U.S.

legal breach.

Page | 72

The details echoed findings of a July report by the Senate Permanent

Subcommittee on Investigations. The panel found evidence that two HSBC

affiliates routed nearly 25,000 Iran-linked transactions involving $19.4 billion

through the bank's U.S. arm over a seven-year period. Those transactions

violated U.S. and British law.

The panel's report criticized U.S. regulators for failing to take action despite

knowledge that HSBC's money-laundering safeguards were inadequate. But the

subcommittee's chairman, Sen. Carl Levin, D-Mich., hailed Tuesday's settlement,

saying it "sends a powerful wakeup call to multinational banks about the

consequences of disregarding their anti-money laundering obligations."

Under the deferred prosecution agreement, HSBC won't be prosecuted if it meets

certain conditions, including stronger internal controls to prevent money

laundering. Such agreements have been used often by the Department of Justice

to settle allegations of foreign bribery charges against large corporations.

Money laundering by banks has become a priority target for U.S. law

enforcement. In another case Monday, British bank Standard Chartered, accused

of scheming with the Iranian government to launder billions of dollars, signed an

agreement with New York regulators to pay $340 million to settle money

laundering charges.

Since 2009, foreign banks with U.S. arms, including Credit Suisse, Barclays and

Lloyds, have made payments to settle allegations they moved money for people

or companies that were on a U.S. sanctions list. Because these banks had U.S.

subsidiaries, they are subject to U.S. laws and regulations.

In his statement Tuesday, HSBC's Gulliver said: "The HSBC of today is a

fundamentally different organization from the one that made those mistakes.

Over the last two years, under new senior leadership, we have been taking

concrete steps to put right what went wrong and to participate actively with

government authorities in bringing to light and addressing these matters."

HSBC announced Monday that Robert Werner, a former head of the Treasury

Department agencies responsible for sanctions against terrorist financing and

money laundering, will begin a new role at HSBC as head of financial crime

compliance and become the bank's money-laundering reporting officer. Werner

has been head of global standards assurance since August.

Page | 73

In January, HSBC hired Stuart Levey, a former Treasury undersecretary for

terrorism and financial intelligence, as chief legal officer. And a former policy

adviser in the Obama administration, Preeta Bansal, in October became HSBC's

global general counsel for litigation and regulatory affair.

11.1 SUDDEN WITHDRAWAL WITH GRADUATES OVERDRAFTS

Graduate Bank Account Features and Benefits

Representative

Example

If you use an overdraft limit of £1,200 the interest

rate charged will be 0% EAR (variable).

Account Type graduat

e

 

Monthly Charge £0 0.00

Minimum Monthly

Credit

£0 0

Interest Free

Overdraft Limit

varies The interest free overdraft available with this

account is:Year 1 -£1500 Year 2 -£1000

Standard Overdraft

Rate

0% There is no authorised overdraft rate.

Daily Overdraft

Charge

£0 0

Headline Interest Rate 0% 0.

Reward Payment £0 This facility is not available.

Minimum Investment £0 0

Internet Banking yes  

Branch Banking yes  

Telephone Banking yes

Account Details

Account Type graduate  

Card Type Visa  

Application Criteria

Page | 74

Permanent UK

Resident

yes This product is only available to

individuals who are permanent UK

residents.

Minimum

Monthly Credit

£0 0

Minimum Age 18 years 18

Maximum Age Unlimited Ul

Minimum

Income

£0 There is no minimum income required for

this account.

Minimum

Investment

£0 0

Maximum

Investment

Unlimited Ul

Student Bank

Account

No This is not a student bank account.

Graduate Bank

Account

yes This is a graduate bank account.

Area

Restrictions

No There are no area restrictions.

Facilities

Internet

Banking

yes  

Branch Banking yes  

Telephone

Banking

yes  

Mobile Banking yes  

Text Banking yes  

Post Office

Banking

yes  

Package

Current Account

no  

Switching

Service

yes  

Debit Card yes  

ATM Card yes  

Page | 75

Prepaid Card no A prepaid card is not available with this

account.

Maximum ATM

Withdrawal

£300 300.00

Passbook no  

Cheque Book optional  

Standing Orders yes  

Direct Debits yes  

Bill Payment

Service

yes  

ATM Mini

Statements

yes  

Text Mini

Statements

yes  

Minimum

Additional

Deposit

£0 0

Maximum

Account Term

2 years The qualifying period is 2 years.

Rates

Headline

Interest Rate

0% 0.

Reward

Payment

£0 This facility is not available.

Introductory

Bonus

0% There is no introductory bonus payable.

Overdraft

Overdraft

Facility

yes  

Interest Free

Overdraft Limit

varies The interest free overdraft available with

this account is:

Year 1

-

£150

0

Year 2 £100

Page | 76

- 0

Maximum

Interest Free

Overdraft

£1,500 The maximum interest overdraft

available is £1500.

Overdraft Buffer

Limit

£10 The overdraft buffer limit is £10.

Standard

Overdraft Rate

0% There is no authorised overdraft rate.

Monthly

Overdraft

Charge

£0 0

Daily Overdraft

Charge

£0 0

Automatic

Overdraft

Facility

£0 0

Overdraft

Arrangement

Fee

no  

Unauthorised

Overdraft Rate

19.9% The annual unauthorised overdraft rate

is 19.9%.

Daily

Unauthorised

Overdraft

Charge

£0 There is no daily unauthorised overdraft

charge.

Monthly

Unauthorised

Overdraft

Charge

£0 0

Overdraft Letter

Charge

£0.00 0

Fee & Charges

Monthly Charge £0 0.00

Free Banking yes  

Transaction 2.75% 2.75

Page | 77

Charge Europe

Transaction

Charge

Worldwide

2.75% 2.75

Debit Card

Charge Europe

0% There is no charge for debit card

transactions outside the UK apart from

the exchange rate adjustment which is

2.75%.

Debit Card

Charge

Worldwide

0% There is no charge for debit card

transactions outside the UK apart from

the exchange rate adjustment which is

2.75%.

ATM Withdrawal

Charge Europe

£2 A charge of 2.00% (min £1.75 max

£5.00) is made for ATM withdrawals

abroad. Withdrawals are free from HSBC

cash machines.

ATM Withdrawal

Charge

Worldwide

£2 A charge of 2.00% (min £1.75 max

£5.00) is made for ATM withdrawals

abroad. Withdrawals are free from HSBC

cash machines

Unauthorised

Transaction Fee

£25 per excess

(max 1 per day)

If the customer has not agreed an

overdraft and the account goes

overdrawn by more than £10 or they

exceed an agreed overdraft limit by

more than.

ATM Withdrawal

Charge UK

£0 0

Unpaid Direct

Debit Charge

£25 The charge made for an unpaid item is

as follows: unpaid item of up to £10no

charge. up to £25£10 per item Above

£25£25.00.

Stopped

Cheque Charge

£12 12

Charge for Copy

of Cheque

£0 0

Unpaid Cheque £25 The charge made for an unpaid item is

Page | 78

Charge as follows: unpaid item of up to £10no

charge. up to £25£10 per item Above

£25£25.00

Standing Order

Charge

£0 0

Unpaid

Standing Order

Charge

£25 The charge made for an unpaid item is

as follows: unpaid item of up to £10no

charge. up to £25£10 per item Above

£25£25.00...expand

Bankers Draft

Charge

£20 20

Duplicate

Statement

Charge

£1 1

Special

Clearance

Charge

£15 15

Bankers

Reference

Charge

£8.50 The charge applied for a bankers

reference is £8.5.

CHAPS Charge £30 30

Text Messaging

Charge

0.0  

Other Charges no  

Incentives

Incentives

Available

forex,green

option,pref savings

account,pref

unsecured loan

Preferential Regular Saver available to

Graduate Bank Account holders.

Preferential interest rates available on

loans up to £25,000. Commission

 Text Message

Updates

no

Faster

Payments

Service

yes  

Student & Graduate Incentives

CHAPS Facility yes  

Page | 79

BACS Facility yes  

Interest Free

Overdraft Year

1

£1,500 1500

Interest Free

Overdraft Year

2

£1,000 1000

Interest Free

Overdraft Year

3

£0 0

Interest Free

Overdraft Year

4

£0 0

Interest Free

Overdraft Year

5

£0 0

Identity Theft

Assistance

no  

Withdraw

Uncleared

Funds

no  

Loan yes A graduate loan package is available.

Application Criteria

Permanent UK

Resident

yes This product is only available to individuals who

are permanent UK residents.

Minimum Monthly

Credit

£0 0

Minimum Age 18

years

18

Maximum Age Unlimit

ed

Ul

Minimum Income £0 There is no minimum income required for this

Page | 80

account.

Minimum

Investment

£0 0

Maximum

Investment

Unlimit

ed

Ul

Student Bank

Account

no This is not a student bank account.

Graduate Bank

Account

yes This is a graduate bank account.

Area Restrictions no There are no area restrictions.

Student Bank Account of Different Banks

Account details

Provider Interest-free

overdraft

Authorised

overdraft

Incentives

Barclays Up to £2,000 a year

from Yr 1-Yr 5

  10% discount on

student possessions

insurance and

student travel

insurance

Clydesdale/

Yorkshire

None Yr 1, 7.49%

(up to

£1,000); Yr

2+, 7.49%

(up to

£3,000)

None

Halifax Up to £3,000 a year

from Yr 1-Yr 5

  20% discount on

card care protection

HSBC Up to £3,000 a year

from Yr 1-Yr 5. £500

formal limit agreed

at account opening

None Discounts on Lonely

Planet travel guides

Lloyds TSB/Bank Yr 1, £1,500 (0- 8.21% plus Free NUS Extra card

Page | 81

of Scotland 6mths £500, 7-

9mths £1,000,

10mths+ £1,500);

Yrs 2 and 3, £1,500;

Yrs 4, 5 and 6,

£2,000

£5pm usage

fee if £10

buffer

exceeded

for three years

offering discounts at

selected stores, and

£75 discount off a

holiday booked with

STA Travel

NatWest Yr 1, up to £1,000

(0-4mths £500, 5-

8mths £750, 9mths+

£1,000); Yr 2, up to

£1,250; Yr 3, up to

£1,500; Yr 4, up to

£1,750; Yr 5, up to

£2,000

Nil Free four-year 16-25

Railcard Student for

existing current

account customers

who switch to a

student account

Royal Bank of

Scotland

Yr 1, up to £1,000;

Yr 2, up to £1,250;

Yr 3, up to £1,500;

Yr 4, up to £1,750;

Yr 5, up to £2,000

Nil Student discount

card on shopping,

discounts on laptops

and essential

contents insurance

Santander Yr 1, £1,000; Yr 2,

£1,250; Yr 3, £1,500;

Yr 4, £1,800; Yr 5,

£2,000

Nil £50 cashback for

customers who open

or switch to this

account between 1

July and 31 August

Smile Yr 1, £1,000; Yr 2,

£1,400; Yr 3, £1,800;

Yr 4+, £2,000

Nil None

Co-operative Yr 1, £1,400; Yr 2,

£1,700; Yr 3, £2,000

  None

Which is the best account to go for students?

The key feature of a student bank account – far outweighing any gimmicky

freebies – will be the size of interest-free overdraft on offer.

This year, the most generous are from Halifax and HSBC, both of which

are offering up to £3,000 interest-free and fee-free borrowing from year one

compared with £1,000 at NatWest and Santander and £1,500 at Lloyds TSB, for

Page | 82

example. Barclays is offering £2,000 interest free from year one. For those who

feel such a high first-year limit might be too tempting for youngsters who have

yet to learn to budget, other banks offer the alternative of a tiered system, with

the level of interest-free borrowing increasing in later years.

NatWest, for example, has an interest-free limit of £1,000 in year one,

with up to £500 in the first four months, rising to £750 in months five to eight,

then up to £1,000 for the last three months. In year two, this rises to £1,250, to

£1,500 in year three, £1,750 in year four and £2,000 in year five.

In comparison, Clydesdale and Yorkshire banks do not offer any interest-

free overdraft facilities to students.

Will customers (students) automatically get a free overdraft?

No. Most limits are quoted as "up to", so don't assume you will get the

maximum. "The level of overdraft offered will be credit scored and if you don't

fully match up to their criteria, you may be offered a lower limit," says Sylvia

Waycot, spokeswoman for Moneyfacts.co.uk. Halifax, for example, while offering

up to £3,000, guarantees a fee-free overdraft of only £500, though this rises to

£1,000 from 16 August.

Halifax data shows the average overdraft by the end of October has been

around £700, in excess of the current £500 level, which means students have

typically been applying for an extension early in their first term or have been

incurring fees – hence the decision to increase the minimum interest-free

overdraft to £1,000.

What if students exceed theirs overdraft limit?

Of those banks that will grant students a further overdraft above the interest-

free limit, Halifax is probably the best value, charging 7.2% (0.58% a month).

But, a spokesman points out: "It is very rare that we would allow a student a

planned overdraft limit in excess of £3,000. However, exceptional circumstances

might warrant it. The absolute maximum is £5,000."

In contrast, you will pay 8.21% plus a fee of £5 per month if a £10 buffer is

exceeded at both Lloyds TSB and Bank of Scotland and 8.9% at Barclays.

Page | 83

Other banks, including NatWest, Santander, Smile and the Royal Bank of

Scotland, do not allow students any additional authorised borrowing. So if you go

beyond your authorised interest-free limit, you will end up paying hefty

unauthorised overdraft charges. Santander, for instance, charges a flat fee of

£5 a day, capped at 10 days a month, for being overdrawn without asking – so

that could mean £50 for each month you fail to get your borrowings back below

your interest-free limit.

HSBC simply do not allow students any further borrowing, either

authorised or unauthorised.

"If you are down to the last £5 of your interest-free overdraft, we will allow

you to spend, say, £10 without charge, but will contact you to let you know you

are at the end of your limit and not allow any further payments to be made from

the account," a spokesman said.

When will bank make students pay off the overdraft?

Students should make sure they know what will be expected of them when it

comes to paying off their interest-free overdraft after graduation.

At HSBC, for example, £1,500 is interest-free during the first year after

graduation and £1,000 interest-free in the second year, with any balances above

those interest-free entitlements charged at 19.9% EAR. After two years, graduate

accounts are converted to standard current accounts.

Will students earn interest on the money in their account?

Those rare students who manage not to need an overdraft facility – perhaps they

have savings, sponsorship, a lucrative part-time job or generous parents – might

want to consider the "in credit" interest rate paid and/or the free incentives on

some student accounts. But there is not a lot of value on offer. Of the banks

offering credit interest, the best is 1.98% for the first year on balances of up to

£1,000 from HSBC, followed by 1% on balances up to £500 from Santander.

What's the best freebie for opening an account?

Santander is offering a £50 cashback to customers who open or switch to its

Student Current Account before 31 August. But historically, the most popular

perk on student accounts was arguably the free four-year 16-25 Railcard from

NatWest, but this is now only on offer to existing current account customers

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who upgrade to its Student account. Elsewhere, perks mainly comprise student

store discount cards and discounts on insurance products.

Can students get a credit card as well?

Students should avoid credit cards; interest rates are very high and debt can

build quickly.

"While borrowing on a credit card may seem tempting, students should

treat this with caution," says Waycot. "Although credit limits offered to students

are small, if you have no regular income to repay the debt then even a few

hundred pounds can soon escalate as interest charges mount."

The best way to avoid troubles is to draw up a budget. You'll find handy

online budget calculators at, for example, ucas.com, studentcalculator.org.uk

and on university websites.

"Many students will receive their grants as a lump sum at the start of each

semester. It is worth setting yourself a weekly budget to ensure you continue to

have money to live on throughout the term," Waycot says.

"And if you do get into trouble with your finances, don't bury your head in

the sand. If you tackle any issue head on, the bank will be more lenient and

willing to help.

"Many branches at, or near, universities also offer specialist advice, which

can be invaluable in helping you to manage your money."

Should students get insurance?

If students are going to be living in halls, the first thing to do is check whether

their contents are already covered. If not, the most tempting thing to do is to put

expensive items on your parents' home insurance policy. Listing them as

contents outside from the home (making it clear you'll be living away from the

residence during term time) is undoubtedly the cheapest way to cover laptops

and mobiles, typically £30 a year.

However, parents need to consider whether they are ready to lose any no-

claims discount they have built up and accept higher premiums if they make a

claim. Endsleigh, and the like, will sell you specialist student insurance. These

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can be pricey. Endsleigh typically charges £131 a year for basic cover or £180

with cover outside the home. A better bet could be JSInsurance which starts

cover at £52 a year. Note that student policies in general have some fairly

onerous clauses, and it's worth reading the key facts document before you hand

over your card details.

If their computer and mobile are their only valuable items, consider a

gadget-only policy (such as gadgetinsurance.com) which will cover a mobile and

four other gadgets such as laptop, camera etc for £79 a year. Such policies often

also cover accidental damage.

But few will pay out unless there is a sign that the home has been

damaged to gain entry, so if your flatmate leaves the back door open and your

stuff is nicked, don't expect a payout.

And unless they are the next Bradley Wiggins, buy a cheap bike to get

around. Paint the frame with flower motifs or generally distress the machine

cosmetically. Paint on their name and mobile number to make the bike hard to

sell for thieves. Then buy a decent £40 Abus lock, and don't worry about insuring

it. Miles Brignall.

11.2 Graduate Overdraft Account

The student overdraft lasts for the 3 years when they are at university, each year

they can review your overdraft to see if you need it to be extended any. The

maximum interest free entitlement increases with each year of study as follows:-

Year 1 - up to £1000

Year 2 - up to £1,250

Year 3 - up to £1,500

The date of student accounts expiry date would probably be their review on

whether they need to extend their overdraft or not. After students graduate, they

can switch to a Graduate account which lets you have interest free on your

overdraft for a couple more years (only up to a certain amount)

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HSBC is scrapping interest free overdrafts for new graduates. Thousands

of graduates will be hit by fresh bank charges after a leading lender scrapped

free overdrafts for students fresh out of university.

Traditionally, banks have given new graduates time to clear their debts by

offering a gradual reduction in the free facility in three years after they stop

studying.

But HSBC has said all new graduates banking with them will have to pay

nearly 10 per cent interest on their overdraft from this August.

If they want the previously free gradually reduced three-year overdraft,

graduates will have to pay £9.95 a month for a Graduate Plus account.

Although competitors said they would continue to offer free overdrafts for

graduates this year, they offered no guarantees this wouldn't change in the

future.

HSBC said it was a way of helping students realise that borrowing costs

money.

Spokesman Karen Garner said: "The new service is put together to create

a more level playing field, we wanted them to distinguish between being a

student and graduate, because as the latter you are in a position to earn money.

"It softens the blow of realising the costs associated with borrowing, and

graduates will be more inclined to take action if they realise they are paying for

something.

"We obviously appreciate there is a risk of that some students won't bank

with us anymore."

All new graduates banking with HSBC will have to pay nearly 10 per cent

interest on their overdraft from this August

The bank currently offers a free overdraft of £1,500 to students in their

third year, but this will be slashed when they are transferred to a graduate

account on July 16. Overdraft charges of 9.9 per cent will start a month later -

and a student with the maximum overdraft will pay almost £12 a month.

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Former students who graduated before this summer will not be affected.

The National Union of Students has warned that HSBC's action would put

pressure on parents to pay off their children's overdrafts to avoid the new fees.

And the NUS said a "significant proportion" of the 280,000 students who

graduate this year will be affected and may turn to their parents to help them

financially rather than pay the new charges.

Vice president Wes Streeting said: "As a result of this decision, we may

see more graduates boomeranging home and asking mum and dad to help them

to reduce their overdrafts.

"The loss of interest free overdrafts for graduates is of concern to us as

those who have recently finished university often do not command great initial

earnings.

"It tends to take them a couple of months at least, sometimes years, to

get on their feet financially. In many cases they will do the same kind of low-paid

work as they did as students for a significant period of time after graduating.

"It is surprising that HSBC have taken this decision and we would urge

them to consider more responsible packages, rather than seeking to extract

greater profits from hard-up graduates."

Since the Office of Fair Trading capped credit card penalty charges in April

last year banks have been looking for ways to recoup money.

Millions of bank customers have reclaimed overdraft penalty charges -

hitting banks hard and making them consider introducing monthly bank charges

as standard.

Andrew Hagger, of the price comparison site Moneyfacts, said: "Students

are going to have an awful lot of debt so one of the major perks is to get as much

interest free borrowing as possible to lighten the load.

"I can't see many students taking on this account and remaining loyal to

HSBC. They need to remember they can go to other banks."

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There is concern that other banks will follow HSBC and cut their interest-

free overdrafts.

Although most high street banks have already launched graduate

accounts with interest-free overdrafts this year, they have not ruled out cutting

these in the future.

The regular graduate accounts at Lloyds TSB, NatWest and The Royal

Bank of Scotland offer interest-free overdrafts starting at £2,000 on graduation,

which gradually reduce over three years.

Barclays offers a similar account with an interest-free overdraft starting at

£1,500 which reduces over two years, as well as an account costing £5 a month

which has perks including £3,000 interest free overdraft.

The student bank market is incredibly competitive. Banks are keen to sign-

up customers while they are young and build up a sense of loyalty so they stay

with them for life, especially students who are likely to command good salaries

once they graduate.

There has been no suggestion so far of cutting the large overdrafts

enjoyed by students or any of the perks used by banks to attract them such as

free four-year railcards.

Earlier this month it emerged students borrow three times as much as

they did a decade ago with a total debt of £18bn, according to the Student Loans

Company. They borrowed more than £3bn last year alone.

The National Union of Students believes "typical" graduate debt is around

£30,000 to cover costs including £3,000-a-year fees.

The 9.9 per cent interest charged on overdrafts in HSBC's graduate

account is around half of that on their standard current account of 18.6 per cent.

Britain's biggest bank has scrapped a decision to charge graduates for

their overdrafts after an internet revolt.

HSBC backtracked after the social networking website Facebook was

besieged with complaints from debt-stricken university leavers.

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A forum set up on the website, "Stop the great HSBC graduate rip-off", had

attracted 5,000 members before the bank's climbdown.

Many graduates were livid because they claimed they were sold their

student accounts on the basis they would get an interest-free overdraft for at

least two years.

In July, HSBC wrote to those graduating this year explaining their student

accounts would be transferred to graduate accounts without an interest-free

overdraft.

It said they would see charges appearing in August on their debt at 9.9 per

cent interest per year.

Anyone with an average £1,500 overdraft would have had to pay £148.50

a year in interest.

A demonstration outside HSBC's Canary Wharf headquarters in East

London was planned by the National Union of Students for next Tuesday.

NUS vice-president Ama Uzowuru said: "We are pleased HSBC has

recognised this would hit graduates when they are at their most vulnerable."

HSBC will now refund any interest levied on overdrafts for 2007 graduates.

It will not charge interest on overdrafts up to £1,500 held by this year's

university leavers while it devises a new graduate account.

Andy Ripley, from HSBC, said: "We have taken this decision following

feedback from our graduate account holders.

"We will work with the NUS on the new account."

11.3 Sudden withdrawal of graduate overdrafts Issues

In July 2007, HSBC suddenly withdrew its interest-free overdrafts for graduates.

Students graduating that year discovered that they were to face unexpected bills

of up to £140 a year. Students mobilised protests using the social networking

website Facebook and in August HSBC reversed their policy, freezing overdraft

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charges to recent graduates and pledging to repay charges deducted in August

while holding talks with the National Union of Students. HSBC is facing an

internet revolt from increasingly angry graduates who have had their interest-

free overdrafts scrapped.

Thousands are threatening to leave the bank, and the National Union of

Students is planning a protest outside HSBC’s Canary Wharf headquarters in

London next Tuesday.

This year’s graduates, already saddled with average debts of over

£12,000, are now charged 9.9% a year interest if they are overdrawn, unless

they agree to pay a £9.95 a month fee instead. Someone with an average

overdraft of £1,500 would be charged £148.50 a year interest.

Graduates are furious because they say they were told HSBC would

provide an interest-free overdraft to help manage their debts after university

when they took out their student accounts. However, the bank announced in July

it would axe the interest-free overdraft incentive.

A group set up on social networking internet site Facebook, called ‘Stop

the great HSBC graduate ripoff’, already has over 3,300 members – and the

number is rising by the hour. One post written yesterday by a graduate from

Exeter says: ‘Just ditch HSBC and join another bank, then they’ll lose a load of

customers! I just moved to Natwest.’

Another livid HSBC university leaver from London adds: ‘Typical HSBC. I

hope all students stop using the bank, then it will give a signal to the restnotto

follow HSBC in introducing charges.’

A Leeds-based graduate says: ‘I think it’s absolutely ridiculous. I can’t wait

to see what HSBC says when everyone waves goodbye and they lose out.’

The NUS is suggesting graduates switch to another bank if they expect

regularly to go overdrawn. RBS/NatWest, Barclays, Abbey and Lloyds TSB all

offer interest-free graduate overdrafts.

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Wes Streeting, from the NUS, says: ‘It is outrageous that HSBC has

imposed such changes after very little notice and consultation with its

customers.

‘We are encouraging current and new students to look carefully at their

banking options. The only way to get HSBC to change its mind is to hit it where it

hurts – in its wallet.’

HSBC wrote to those affected in late June and early July giving 30 days’

notice of the changes, so some would have started to rack-up charges from July

28. It came after HSBC transferred all student accounts from 2007 graduates into

graduate accounts.

Graduates from previous years with interest-free overdrafts from HSBC will

retain their facility. Those who graduated in 2006 received £1,500 interest-free

until this summer and will get £1,000 for another year. RBS offers a £2,000

interest-free overdraft in the first year after graduating, £1,500 in year two and

£1,000 in year three.

It charges 9.4% on any further agreed borrowing. Lloyds TSB has the same

offer but with a higher borrowing rate of 16.8%.

Abbey offers £2,000 interest-free in year one, £1,000 in year two, and

£500 in year three, with further borrowing at 9.9%. Natwest offers the same

terms as Abbey, but with a 17.81% borrowing rate. Barclays offers £1,500 in year

one, £1,000 in year two and further borrowing at 15.6%. Anyone switching in

their second or third year after graduation will remain in that band on their new

account.

An HSBC spokesman says: ‘At 9.9%, we offer one of the lowest borrowing

rates on overdrafts. We will not charge a higher rate for exceeding the agreed

overdraft.’

A Financial Ombudsman Service spokeswoman says: ‘If we receive a

complaint, we would look closely at the terms and conditions and any promises

made to consumers.’

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The revolt against HSBC is the latest consumer uprising against financial

institutions in which the internet has proved a powerful tool in spreading the

word quickly.

Others have included:

• Bank charges – the outcry about high penalty fees and interest rates charged

by banks when their customers go exceed their overdraft limit;

• Payment protection insurance – the way insurance is sold as part of a loan or

credit card is under investigation by the Competition Commission;

• Post Office closures – customers, particularly in rural areas, have petitioned to

keep post offices in their communities;

• Endowment mis-selling – consumers have used internet sites to swop

information and print standard letters of complaint.

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Latter T.(2007). Hong Kong’s Money: The Resumption of Chinese Sovereignty

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Book L. (2011). Hsbc:Hang Seng Bank, Hsbc, Rosanna Wong, Li-Ka-Shing, the

Hongkong ans Shanghai Banking Operation, Hsbc Main Building, Hong Kong.

Hong Kong: General Books. Page 35.

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