HSBC 2001 Annual Report Download - page 28

HSBC HOLDINGS PLC
Description of Business (continued)
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become effective on various dates in 2002.
Substantial new regulations will be issued to
implement the USA Patriot Act. Significant new
requirements for information gathering, record
keeping and ongoing monitoring are likely to be
imposed by the regulations.
Latin America
There are over 180 banks in Brazil operating through
a network of over 24,000 branches and offices.
Consolidation in the local banking industry is under
way, increasingly involving foreign banks (at the end
of 2001 there were 56 banks in Brazil with foreign
ownership interests). With a population of 169
million and an estimated 67 per cent of the active
population ‘unbanked’ , growth opportunities in the
retail sector, in particular, appear favourable in the
medium/long term. In comparison with more
developed markets, insurance penetration in Brazil is
fairly low and is heavily concentrated in the non-life
sector. HSBC’s ability to cross-sell both life
assurance and general insurance products through its
extensive branch network means that it is well-
placed to take advantage of this economic and
competitive environment.
In Argentina, international competitors are
providing the greatest competition in core banking
services and insurance with most of the major banks
having substantial foreign ownership interests. The
recently announced changes in the Argentine
financial markets will have a profound impact on
commercial and personal financial needs. HSBC,
with its broad national network and sales force, is
one of only two or three groups in Argentina still
capable of providing a full financial service to its
clients and is well-placed both as a provider of
personal financial services and in capital markets.
In view of the current economic crisis in
Argentina HSBC continues to monitor closely
developments impacting the financial system. At
present, HSBC expects to continue to operate in
Argentina although political events may cause it to
reassess its present policy and may require it to take
additional actions including significant restructuring
of its Argentine operations.
Employees
As at 31 December 2001, HSBC had approximately
180,000 employees (including part-time employees)
worldwide (of whom approximately 59,000 work in
the United Kingdom, 14,000 in France, 25,000 in
Hong Kong, 14,000 in the United States and 21,000
in Brazil), compared with approximately 172,000 at
31 December 2000 and 154,000 at 31 December
1999. HSBC estimates that approximately one-half
of its labour force worldwide is unionised. Most
significant concentrations of union membership
occur in the United Kingdom, Brazil (where union
membership is a requirement under national
employment legislation) and France. Management
believes that the current relationship between HSBC
and its employees is harmonious, as it has been in the
past. HSBC has not experienced any material strikes
or work stoppages within the past five years.
Regulation and supervision
HSBC’s operations throughout the world are
regulated and supervised by the relevant central
banks and regulatory authorities in each of the
jurisdictions in which HSBC has offices, branches or
subsidiaries. These authorities impose certain reserve
and reporting requirements and controls (for
example, capital adequacy, depositor protection, and
prudential supervision) on banks. In addition, a
number of countries in which HSBC operates impose
additional limitations on (or that affect) foreign or
foreign-owned or controlled banks and financial
institutions, including: restrictions on the opening of
local offices, branches or subsidiaries and the types
of banking and non-banking activities that may be
conducted by those local offices, branches or
subsidiaries; restrictions on the acquisition of local
banks or requiring a specified percentage of local
ownership; and restrictions on investment and other
financial flows entering or leaving the country.
Changes in the supervisory and regulatory regimes of
the countries where HSBC operates, particularly in
Asia, will determine to some degree HSBC’s ability
to expand into new markets, the services and
products that HSBC will be able to offer in those
markets and how HSBC structures specific
operations.
The most important jurisdictions that regulate
and supervise HSBC’s activities are the United
Kingdom, Hong Kong, the United States and France.
The UK Financial Services Authority (‘FSA’ )
supervises HSBC on a consolidated basis.
Additionally, each operating bank within HSBC is
regulated by local supervisors. Thus, The Hongkong
and Shanghai Banking Corporation Limited and