The Hongkong and Shanghai Banking Corporation was founded in Hong Kong on March 3, 1865, and in Shanghai one month later. In 1980, HSBC acquired 51 per cent of Marine Midland Bank, buying the rest in 1987. HSBC Holdings was established in Britain in 1991 as the parent of The Hongkong and Shanghai Banking Corporation ahead of its purchase of the UK-based Midland Bank and the impending 1997 transfer of sovereignty of Hong Kong from Britain to China.
HSBC to exit retail banking in South Korea amid profitability concerns
HSBC, Europe's biggest bank, will further scale down its South Korean operations next week by closing its retail business, following the sale of its insurance business in April.
The bank will shut 10 of its 11 branches in the country and axe 230 staff.
The outlook for consumer banking in South Korea remains a concern to firms there. Standard Chartered said earlier that it had seen a decline in asset quality in the country and would reassess the value of its goodwill.
HSBC said it "remains committed to South Korea" but would now focus on its global banking and markets business, the group's investment banking arm. It said it would seek regulatory approval for the closure.
A Hong Kong-based HSBC spokeswoman said the lender would continue to develop custody, payment and cash management, trade services, foreign exchange services and project and export financing in South Korea.
A person familiar with the situation said HSBC's retail business in South Korea had been profitable overall despite recording losses in one or two years, but "the group questioned if the profits were sustainable". HSBC will no longer accept new retail customers in South Korea.
Since the implementation of a cost-cutting strategy in May 2011, HSBC has closed or disposed of 52 operations, including exiting from retail banking and the wealth-management business in 17 markets.
The banking business in South Korea is falling behind other markets in the region. Loan growth and banks' return on equity, a ratio measuring their profitability, were at double-digit rates across the Asia-Pacific region but in the single digits in South Korea, an analyst said.
The country's personal debt rehabilitation scheme, a government policy to protect consumers, was likely to lead to bad loans in banks, Standard Chartered said last month.
Standard Chartered, which beat HSBC to acquire Korea First Bank in April 2005, found a significant deterioration of asset quality there. Almost 40 per cent of its consumer bank loan impairments in the first half of the year came from the country and its consumer banking performance in South Korea remains weak.
In general, foreign financial companies find it difficult to make a profit in South Korea because of the country's culture of financial protectionism.