HSBC

ABOUT HSBC

2007

2007 was a year of challenges for HSBC.

The weakness in the American property market affected its US subsidiary, HSBC Finance Corporation, and in February the bank issued a trading statement to warn investors about the impact of bad debts. Many other banks follow suit and by the end of the year HSBC is winning plaudits for its early announcement and prudent handling of the situation. In a strategic review of its consumer and mortgage lending businesses, the bank announces the closure of Decision One, its sub-prime mortgage loans wholesale channel.

Elsewhere, HSBC continues to expand its business in key markets and through key products. In April, the bank officially incorporates in China and the chairman announces the intention to 'significantly invest in and develop our business in the country.' By the end of the year HSBC is operating from 53 outlets in the country – up from 39 – and is the first foreign bank to receive permission to open a branch in rural China. September sees the official launch of HSBC Premier – the world's first truly global banking service – which is soon dubbed 'The world's local bank account.'

HSBC continues its long-standing engagement with the environmental agenda when it launches the HSBC Climate Partnership in May. This five-year, US$100m project aims to tackle the causes and impact of climate change. The bank also appoints Nicholas Stern to the post of special advisor on Economic Development and Climate Change. The bank's principles are put into practice to good effect in its new HQ in Mexico which wins Gold awards for its environmental design, construction and operation. This is just one of many awards that HSBC receives throughout the year - others include Asia's top retail bank and the Best International Islamic Bank.

Both looking back, and looking forward, HSBC announces during the year that it has commissioned a new history of the bank to be published in 2015 to coincide with the bank's 150th birthday.

Beacuse of willing only to entroduce with HSBC I will make the history shorter.

1900-1945

In the early years of the twentieth century, HSBC widened the scope of its activities in the East. It became increasingly involved in the issuing of loans to national governments, especially in China, to finance modernisation and internal infrastructure projects such as railway building. The First World War brought disruption and dislocation to many businesses but the 1920s saw a return to prosperity in the East as new industries were developed and trade in commodities such as rubber and tin soared. The bank’s new head office in Hong Kong (1935) and the new buildings at major branches such as Bangkok (1921), Manila (1922) and Shanghai (1923) reflected this confidence. In contrast the political outlook in China grew increasingly uncertain. Throughout the 1930s, in keeping with its long-standing connections with government finance in China, the bank took a leading part in efforts to stabilise the Chinese national currency.

In the Second World War, the majority of the bank’s staff in the East became prisoners of war as the Japanese advanced through Asia. The chief manager, Sir Vandeleur Grayburn and his designated successor died while prisoners in Hong Kong. The bank survived under the guidance of its London Advisory Committee who were empowered to act as a Board of Directors in 1943, and under the leadership of Arthur Morse who became Chairman and Chief Manager of the bank at the same time. With most of the branch network shut down the bank adjusted to wartime conditions whilst always making plans to return to its home.

About the Bank of England

The Bank of England is the central bank of the United Kingdom. Sometimes known as the 'Old Lady' of Threadneedle Street, the Bank was founded in 1694, nationalised on 1 March 1946, and gained independence in 1997. Standing at the centre of the UK's financial system, the Bank is committed to promoting and maintaining monetary and financial stability as its contribution to a healthy economy.

The Bank's roles and functions have evolved and changed over its three-hundred year history. Since its foundation, it has been the Government's banker and, since the late 18th century, it has been banker to the banking system more generally - the bankers' bank. As well as providing banking services to its customers, the Bank of England manages the UK's foreign exchange and gold reserves.

The Bank has two core purposes - monetary stability and financial stability. The Bank is perhaps most visible to the general public through its banknotes and, more recently, its interest rate decisions. The Bank has had a monopoly on the issue of banknotes in England and Wales since the early 20th century. But it is only since 1997 that the Bank has had statutory responsibility for setting the UK's official interest rate.

Interest rates decisions are taken by the Bank's Monetary Policy Committee. The MPC has to judge what interest rate is necessary to meet a target for overall inflation in the economy. The inflation target is set each year by the Chancellor of the Exchequer. The Bank implements its interest rate decisions through its financial market operations - it sets the interest rate at which the Bank lends to banks and other financial institutions. The Bank has close links with financial markets and institutions. This contact informs a great deal of its work, including its financial stability role and the collation and publication of monetary and banking statistics.

The Bank of England is committed to increasing awareness and understanding of its activities and responsibilities, across both general and specialist audiences alike. It produces a large number of regular and ad hoc publications on key aspects of its work and offers a range of educational materials. The Bank offers technical assistance and advice to other central banks through its Centre for Central Banking Studies, and has a museum at its premises in Threadneedle Street in the City of London, open to members of the public free of charge.

The European Central Bank

The ECB

The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area. The euro area comprises the 15 European Union countries that have introduced the euro since 1999.

Banknotes

The euro banknote series comprises seven different values (denominations): €5, €10, €20, €50, €100, €200 and €500. They are legal tender throughout the euro area.

Size: 120 x 62 mm
Colour: Grey
Architectural period:

Classical

Size: 127 x 67 mm
Colour: Red
Architectural period:

Romanesque

Size: 133 x 72 mm
Colour: Blue
Architectural period:

Gothic

Size: 140 x 77 mm
Colour: Orange
Architectural period:

Renaissance

Size: 147 x 82 mm
Colour: Green
Architectural period:

Baroque and rococo

Size: 153 x 82 mm
Colour: Yellow-brown
Architectural period:

The age of iron and glass

Size: 160 x 82 mm
Colour: Purple
Architectural period:

Modern 20th century architecture

Close

On the front, the banknotes show windows and gateways. They symbolise the European spirit of openness and cooperation. The 12 stars of the European Union (EU) represent the dynamism and harmony of contemporary Europe.
The bridges on the back symbolise communication between the people of Europe and between Europe and the rest of the world.

The other design elements are:

• the name of the currency - euro - in both the Latin (EURO) and the Greek (EYPΩ) alphabets;
• the initials of the European Central Bank in five linguistic variants - BCE, ECB, EZB, EKT and EKP - covering the then 11 EU official languages;
• the symbol © indicating copyright protection; and
• the EU flag.

Bank

A banker or bank is a financial institution that acts as a payment agent for customers, and borrows and lends money. In some countries such as Germany and Japan banks are the primary owners of industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies.

The first modern bank was founded in Italy at Genoa in 1406, its name was Banko di San Giorgio (Bank of St. George).

Banks act as payment agents by conducting checking or current accounts for customers, paying drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as cheques,telegraphic transfer, EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current account, accepting term deposits and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current account, by making installment loans, and by investing in marketable debt securities and other forms of lending.

Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account.

Banks borrow most funds borrowed from households and non-financial businesses, and lend most funds lent to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to.

Definition

The definition of a bank varies from country to country.

Under English law, a bank is defined as a person who carries on the business of banking, which is specified as:

• conducting current accounts for his customers
• paying cheques drawn on a him, and
• collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negosiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques do not depend on how the bank is organised or regulated.

The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions:

• "banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).

• "banking business" means the business of either or both of the following:

1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period;
2. paying or collecting cheques drawn by or paid in by customers

Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has lead legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques.

Wider commercial role

However the commercial role of banks is wider than banking, and includes:

• issue of banknotes (promissory notes issued by a banker and payable to bearer on demand)
• processing of payments by way of telegraphic transfer, EFTPOS, internet banking or other means
• issuing bank drafts and bank cheques
  
• accepting money on term deposit
  
• lending money by way of overdraft, installment loan or otherwise
• providing documentary and standby letters of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures
• safekeeping of documents and other items in safe deposit boxes
  
• currency exchange
• sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a 'financial supermarket'.