1 ) Introduction
Merger and purchase has been a trend in bank sector. As being a leading foreign bank, HSBC has been very active in acquisition all over the world. Their new acquisitions contain Bank of Bermuda in 2004; Household International, Kepple Insurance in 2003 as well as the Mexican traditional bank Financiero Bital in 2002. Among the purchases, the Household package is life changing and has got the largest influence on HSBC. This case study analyzes the benefits of the acquisition, and also the major dangers associated with the package, in respect to HSBC. The purpose of the study is to understand how financial institutions benefit from consolidation and how combination boundary acquisition can help the banks in internationalization. The structure in the report is just as follow: 1st, the background info is supplied which includes the data of the two parties inside the deal as well as the description in the transaction. The other part of the survey explains how come HSBC choose Household his or her acquisition target and how the acquisition will help HSBC to achieve their ~ !0~ Handling for Growth~ !1~ proper plan. In that case, the greatest concern by HSBC~ !/~ t share cases over the purchase, i. at the. the credit rating risk and reputation risk will be examined. Finally, inside the conclusion, I will summaries the learning points in the case study.
2 . History
2 . you HSBC
HSBC is one of the major banking and financial services agencies in the world. Its international network comprises over 9800 offices in seventy seven countries and territories in Europe, the Asia-Pacific region, Americas, the Middle East and Africa. HSBC is listed in stock exchanges in London, Hong Kong, New York and Paris. It is shares are held by around one hundred ninety, 000 shareholders in some 90 countries and territories. Through a global network linked by advanced technology, the bank provides full range of financial companies to more than 110 million customers: personal financial assistance; consumer financial; commercial bank; corporate expenditure banking and markets; and banking. In 30 Summer 2002, the HSBC Group had total assets of US$746 billion and total capital resources of US$55 billion.
2 . 2 Household International
Home International is a second largest consumer loan provider in the United States. They give middle-market client with several kinds of loan goods principally in america, the United Kingdom and Canada. The products include real estate property secured-loans, vehicle finance financial loans, MasterCard and Visa bank cards, private label bank cards, tax repayment anticipation loans, retail installment sales loans loans and other types of unsecured loans, and also credit and specialty insurance products. During the time of acquisition, the corporation had around 32, 500 employees, and over 50 , 000, 000 active buyer accounts. Household subsidiaries conduct business in the United States through 1400 offices in 46 states.
2 . 3 The Transaction
The obtain was completed in March 2003. At the time, the total consideration for the current excellent Household prevalent stock was approximately US$14, 242 million. The HSBC shares granted in exchange intended for Household prevalent shares resulted in an increase in the issued talk about capital of HSBC of approximately 13. 38%. The composition of the purchase is that Household merged with HSBC, a completely owned additional of HSBC group after which Household is wholly owned by HSBC group.
3. 1 Much larger Consumer Basic
HSBC is the global leader in consumer banking. It is section of the bank~ !/~ s technique to grow their consumer resources. By add-on of Household, HSBC increase her consumer bottom by 40 million and increase total owned possessions by US$101billion. In buyer banking, amount of sales is critical in the competition. HSBC could enjoy overall economy of range as they can share mortgage processing and information systems with Home and thus brings about significant expense saving. Furthermore, HSBC can easily expand its service range...
References: Paul Maidment, ~ !0~ HSBC-Household Deal Makes Sense~ !1~, Forbes. com (14 November 2002)
HSBC News Archive, ~ !0~ HSBC~ !/~ s EGM - Chairman~ !/~ s i9000 speech~ !1~, (28 Marly 2003)
The Banker, ~ !0~ HSBC~ !/~ h Killer Move~ !1~, (6 Oct 2003)
HSBC, ~ !0~ HSBC to Acquire Home International~ !1~, (14 Nov 2002)
Whilst gary A. Dymski ~ !0~ The Global Financial institution Merger Wave: Implications for Developing Countries~ !1~ Division of Economics, University of California, (8 April 2002)
HSBC web page: www.hsbc.com
HSBC Annual Review 2003
HSBC Annual Assessment 2004