The history of the Hongkong and Shanghai Banking Group (HSBC) is one that is as rich and varied as it is unique. The group’s principal operating companies have been in business for over a century, with the founding member having been involved in banking and trading between China and Europe for more than two hundred and twenty years.
HSBC have been represented in the UK as far back as 1865, not long after the group was consolidated, although some of its members can claim a presence going as far back as the late eighteenth century.
However the HSBC group only really began to leave their footprint in the UK when the acquired the Midland Bank Group in 1992. This was a major acquisition in anyone’s terms and placed the group as one of the World’s leading banking organisations. Their position was further strengthened when HSBC purchased Frances’s Crédit Commercial de France S.A. (now CCF S.A.) in the year 2000.
The Midland Bank, in itself has a long history within the UK banking system. It first began trading in the Midlands principal city of Birmingham in August 1836, long before most of its London based predecessors. The bank was the brainchild of a Mr. Charles Geach who had left a secure post at the Bank of England to pursue his dream of bringing banking to the Midlands. Geach enjoyed the considerable support of the city’s leaders both in industry and commerce who wanted to free themselves of the clutches of the capital’s bankers.
The irony was that at that time Birmingham was far more financially buoyant than London, as a result of the Industrial Revolution that was going full tilt there and in the North of England. Geach knew very well how to capitalize on this buoyant economy and he developed very strong links with all the leading industrial concerns who were establishing themselves in the heavy industries that were situated in and around the city. It was only a matter of time before the Midland began to develop outside of Birmingham and this they did, through a series of acquisitions and planned expansion. Ironically enough, as the end of the nineteenth century drew close, the Midlands even began to make an impression on London itself, with the acquisition of the
Central Bank of London
At the end of World War One, with deposits of over £300 million, the Midlands bank could rightly lay claim to the largest bank in the World. By 1919, the Midland Bank’s international standing had increased to such an extent that it held the role of London bank representative for 650 banks situated around the world.
Locally things were going well for the Midland Bank, and especially in the second half of the twentieth century. The end of restrictions of credit saw the Midlands capable of taking full advantage of the opportunities that were opening up everywhere.
Midland responded through introducing a series of innovative services, beginning with personal loans and chequing accounts as far back as 1958 and the issue of cheque cards in 1966. The bank’s belief in the opportunities that personal banking would provide was the acquisition and development of the Forward Trust group which the Midland acquired in the late nineteen fifties. This offshoot rapidly gained a well-earned reputation as a market leader in installment finance, leasing and factoring services.
Maintaining their roots in commercial banking saw Midland’s purchase a share in 1967 of the Montagu Trust, which owned Samuel Montagu & Co. Limited, a London based merchant bank.
During the domestic downturn of the mid seventies Midland began to expand their activities overseas in the USA but unfortunately without the greatest success. Europe proved a happier hunting ground for them where banks in both Germany and Switzerland. The marriage between Midland and HSBC came after a relatively long engagement. Signs if the seriousness of HSBC’s intentions came in 1987 when the company acquired 14.9 per cent equity. Eventually in 1992, HSBC acquired the balance of shares in the Midland, in the largest acquisition in UK banking history.
The acquisition provided HSBC with the major foothold in Europe that it had long wanted. Although the Midland Bank retained its original title till 1999, it became known as the HSBC bank. History has taken the Hongkong and Shanghai Bank a long way from its oriental beginnings.