HSBC 2004 Annual Report Download - page 11

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HSBC USA, Inc., and Safra Republic Holdings S.A.
In July 2004, HSBC Bank USA, Inc. merged with
HSBC Bank & Trust (Delaware) N.A. to form HSBC
Bank USA.
To expand its base in the eurozone, in October
2000 HSBC completed its acquisition of 99.99 per
cent of the issued share capital of Crédit Commercial
de France S.A., now CCF S.A. (‘CCF’ ), a major
French banking group.
In 2002, HSBC made further steps in expanding
its presence in North America, completing the
acquisition of 99.59 per cent of Grupo Financiero
Bital, S.A. de C.V. (now Grupo Financiero HSBC,
S.A. de C.V. (‘HSBC Mexico’ )), the fifth-largest
banking group in Mexico measured by assets and the
third by customer deposits.
Mainland China remains a critical long-term
growth area for the Group. In 2002, HSBC
completed the acquisition of a 10 per cent equity
stake in Ping An Insurance Company of China
Limited (‘Ping An Insurance’ ). Ping An Insurance is
the second-largest life insurer and the third-largest
property and casualty insurer in mainland China. In
June 2004 Ping An Insurance listed its shares
through an initial public offering (‘IPO’ ) in Hong
Kong. HSBC invested a further US$168 million,
reducing its holding to 9.99 per cent.
In March 2003, HSBC acquired Household
International, Inc. which, in December 2004,
changed its name to HSBC Finance Corporation.
HSBC Finance Corporation offers HSBC national
coverage in the US for consumer lending, credit
cards and credit insurance through various
distribution channels.
Also in 2003, HSBC acquired assets in Brazil,
including all the shares of Banco Lloyds TSB S.A.-
Banco Múltiplo and a consumer finance company,
Losango Promotora de Vendas Limitada
(‘Losango’ ).
In February 2004, the acquisition of The Bank
of Bermuda Limited (‘Bank of Bermuda’ ) was
completed for US$1.2 billion, adding a strong
position in the local banking market in Bermuda and
significant scale and geographical spread to HSBC’s
existing international funds administration, private
banking, trust and payments and cash management
businesses.
In May 2004, Hang Seng Bank acquired 15.98
per cent of Industrial Bank Co. Limited (‘Industrial
Bank’ ) for US$208 million. With over 260 outlets in
mainland China, Industrial Bank is one of only 10
national joint-stock banks, and had total assets of
approximately US$23 billion at 31 December 2003.
In June 2004, HSBC acquired 14.62 per cent of
UTI Bank in India for US$68 million. With over 250
branches, UTI has the second largest retail banking
network amongst Indian private sector banks.
In August 2004, HSBC completed the largest
single equity investment in a mainland China bank
by a foreign bank when it acquired 19.9 per cent of
Bank of Communications Limited (‘Bank of
Communications’ ) for US$1,747 million. Bank of
Communications is mainland China’s fifth largest
bank, with assets of US$112 billion and
approximately 2,700 branches in 137 cities in
mainland China as at 31 December 2003.
In November 2004, HSBC completed the
acquisition of 100 per cent of Marks and Spencer
Retail Financial Services Holdings Limited, which
trades as Marks and Spencer Money (‘M&S
Money’ ) for US$1,044 million, M&S Money is one
of the UK’s top 10 credit card providers.
Outlook
In 2005, the Group expects consumer spending
growth to slow across much of the Western world,
bringing increased competition and pricing pressure
on available business. The slowdown in consumer
spending is expected to be reflected in a heightened
focus on efficiency and economies of scale in the
corporate sector, which may trigger increased merger
and acquisition activity, a trend already evident in
2005. The pressure to reinforce personal long-term
savings and tighten fiscal discipline, as government
responsibility for pension and healthcare
programmes is clarified, are likely to contribute to
slower consumer spending in the western world.
By contrast, in emerging markets such as Brazil,
Mexico, India and the Association of South East
Asian Nations (‘ASEAN’ ) countries, relatively
stable currencies and historically low interest rates
are expected to continue to promote consumer
activity, fuelling domestic growth and reducing
export dependence. Mainland China is expected to
continue to play an increasingly important role, not
only through its burgeoning exports, but also as a
major and growing market for commodity producing
countries and for those developed countries that are
supplying the technology, equipment and services to
support its economic expansion.
The Group is alive to the changing nature of the
global economy and the accelerating pace of change,
and monitors the impact on sentiment and consumer
spending of strong domestic property prices, which
in many markets are proving resilient to rising
interest rates. While such resilience is
understandable in the context of historically low