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HSBC Greater China Area Strategy

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Steven GAO

on 12 October 2012

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Transcript of HSBC Greater China Area Strategy

Banks in Taiwan Overview National
Commercial
Foreign Major banks in Taiwan The Export-Import Bank of ROC

National Agriculture Bank National Bank of Taiwan

Land Bank of Taiwan

Taiwan Cooperative Bank

First commercial Bank

Hua Nan Commercial Bank

Chang Hua Commercial Bank Commercial CitiBank Taiwan

Standard Chartered

HSBC Foreign How do these banks perform? Overview Taiwan's Economy Mainland has become
the largest Importer of Taiwan Taiwan's GDP HSBC's Taiwan Strategy Strength: 1. Global Business NetWork
2. Experienced Staff

Weakness: New Comer of Taiwan Market

Opportunity: Unification of Greater China Area

Threat: Homogeneous competition with other foreign banks Our SWOT Analysis Features of HSBC(Taiwan) The unification of Greater China Area is the
historical trend ... HSBC Hong Kong Strategy HSBC Greater China Area Strategy China Economy
and RMB Overview Overview Hong Kong Economy
and Banking GDP Key Ratios of HK's Banks Who is playing in HK Banking Market? BOC Gp., Bank of China Group

HSBC Gp., HSBC Group

Standard Chartered

Bank of East Asia

DBS(Hong Kong)

. . . 1. Hong Kong to be built as the RMB Offshore Centre

2. Unification of Three Area Cross Taiwan Strait, some treaties among HK, Mainland and Taiwan. Like ECFA, CEPA. . . Opportunities Solidify the achieved position
Keep the market share What HSBC can do? 1. Absorb offshore RMB deposit

2. Take advantage of the current inter-mainland-HK-Taiwan network

3. Adjust itself in accordance with the trading and financial environment of Greater China Area 1. Spread between Deposit Rate and Loan Rate is getting smaller and smaller.

2. Sources for fee and commissionaire Income is shrinking.

3. Credit Ratings of almost all financial institutes are dropping.

4. New Entrants. Threats What HSBC should do? Take a defensive position.

Maintain the loyalty of existing client. There is no doubt ! ! ! HSBC is the market leader Mainland China Hong Kong Taiwan from 2006 to 2011 Taiwan Banks' Asset six years change Taiwan Banks' ROA five years change HSBC Citibank Shanghai
Commercial Standard
Chartered Commercials Commercials Citibank Shanghai
Commercial HSBC Standard
Chartered Citibank Shanghai
Commercial HSBC Standard
Chartered Commercials 2011 Deposit Market Share 1. Relatively high ROA, as well as ROE. 2. Low asset scale, market share and deposit. 3. Profit relies mainly on non-interest income. Strategy 1. Make profit by facilitating the Taiwan-Mainland trading. Ex-Im financing. 2. Advertise our international network and experience in doing financial business. 3. Increase market share by acquiring banks in problem. GDP Major Trends If you have money, what to invest?

The Answer is: RMB ! ! !

Haha . . . Internationalization
of RMB Mainland, Hong Kong, Macau, Taiwan Unification of
Three Areas Across Taiwan Strait RMB is getting more acceptable 8.27 6.83 now?
6.2997 HSBC(Hong Kong)'s Main Features 2. High non-interest income ratio. 3. Fit advanced-deposit ratio 1. Huge asset and profit. 4. Not lowest cost ratio. USD/CNY Exchange Rate since the end of 2002 Major Banks in China's Market ICBC
BOC
CCB
ABC
BOCom Everbright Bank
Merchant Bank
Industrial Bank
Hua Xia Bank
Guangfa Bank
SPD Bank
Evergrowing Bank
China Citic Bank
Minsheng Bank
SDB
Zheshang Bank
. . . Jinzhou Bank
Hubei Bank
Baoshang Bank
Taizhou Bank
Bank of Dalian
Bank of Tianjin
Bank of Hangzhou
Bank of Beijing
Bank of Shanghai
Bank of Nanjing
Bank of Ningbo
Bank of Ningxia
Bank of blablablabla . . .
. . .
. . . China's Banking Industria
and HSBC Mainland Strategy Asset Market Shares Comparison among HSBC and three typical kins of Chinese Bank Features of HSBC(China) HSBC
Citibank
Deutsche Bank
Standard Charted
DBS
Nanyang Commercial Bank
RBS
. . . 1. Small market share, insufficient deposit 2. Loss in retail business HSBC v.s. Main Competitors in China Mode of profitability 3. relies mainly on global and capital business 4. Advantage: International network and Experience HSBC Mainland China Strategy 1. Trading Business 2. RMB cross-border Settlement Business Client 1. Foreign investors(including HK and Taiwan investors) 2. Ex-Import Traders Trading Financing Currently Existing Business Keep HSBC's Leading Position
by Getting Engaged in Innovation Product innovation Policy innovation Technical innovation Derivatives combine with international trade financing Government debts combine with commercial loans To relax the refinancing conditions To extend the terms of financing Decrease Trade Transaction Risk

Accelerate Account Receivables

Lower Banking Fee Cost HK and Taiwan Investment to Mainland Based on the analysis above,
what is the
CORE COMPETITIVENESS
of HSBC? NO ! Retail and Individual Business International Business ? YES ! Sources of deposit is narrow,
5 mighty banks, ICBC, BOC, CCB, ABC, BOCom . . .

Urban commercial banks
can give their local clients many preferential policies . . .

Taiwan banks :started open their branches or Rep. in China . . . Our Competitors Hong Kong investment consists the largest proportion of China's FDI,

Profit by financing these investing projects. HK --- RMB offshore center --- opportunity ! HSBC Core Competitiveness is : 1. Hong Kong localized 2. International network 3. Experienced staff and managers PAYMENTS INTO THE MAINLAND
1. Trade payments for goods
2. Trade payments for SERVICES
3. Offshore Loan - subject to SAFE filing
4.FDI - subject to MOFCOM approval, PBOC and SAFE filing
5. Expatriate Salaries - not allowed PAYMENTS FROM THE MAINLAND
1. Trade payments for GOODS
2. Trade payments for SERVICES
3. Offshore Borrowing - subject to approval by PBOC and SAFE
4. ODI - subject to Investment Regulatory Department approval, SAFE filing
5. Dividend Payments/ Repatriation of Profit
6. Expatriate Salaries Types of Business RMB Cross-border Settlement New Opportunities in the Development of WestChins Cross-border Settlement between China and(2012,9):
Khazakhstan,
Kyrgyzstan,
Tachikistan,
Pakistan,
Vietnam,
Burma,
Lao. . . Manzhouli Kashgar Ruili Tongshing The track of Foxconn, a Taiwan Enterprise Hong Kong
1. maintain its market share and leading position..
2. Take advantage of its unique geographic and political location Taiwan (HSBC ranking 16th in terms of asset)
1. Expand the scale of business in Taiwan.. by acquiring in-problem banks
2. Build better reputation among clients.. by improving service quality and doing positive marketing strategy. Notice that HK remains the largest source of Chinese FDI, and HK entreprises' direct investment to China keeps increasing every year, it is HSBC's opportunity to make profit by financing these investment. Yet investment should keep in accordance with the pace of economy. Now the most active economic areas are no longer the Pearl River Delta and YanngTze River Delta areas. The Bohai Bay Area, Northeast and WestChina are being activated by national projects. So it is wise to keep its presence in Shanghai-Hangzhou-Nanking and Guangzhou-Shenzhen-Zhuhai, meanwhile set up new branches in Peking-Tianjin, Northeast, and WestChina areas. Financing Industry of those places is underdeveloped. Therefore, if we act as the early bird for those areas, we can win the competition against Chinese national banks . . . Where to finance investment? Strategies in HK and Taiwan Conclusions Well experienced in HK,
New entrant in Mainland
and Taiwan Present Position Hong Kong: Offshore RMB business Future Vision Taiwan : Build reputation first and then finance the Taiwan's investment to Mainland. Mainland:
1. Assign joint venture agreement with security company and carry out investment bank business.
2. Offer loans to foreign investors (including HK and Taiwan investors)
3. New experimental Cities of RMB Cross-border Settlement: Inner-Mongolia, Yunnan, Guangxi, Xinjiang . . . 2011
Unit: million HKD 2011
Unit: million HKD 2011 2009 2007 2005 2003 2001 Other foreign banks such as citibank , standard charted bank 2009, 7 Mainland Strategy: to help
China based firms to go out into the World 1. Investing banking business
e.g. to do IPO for mainland companies
improve fee and commission revenue. 2. Establish our fame by improving service quality and doing positive marketing. Group Members HSBC Greater China Area Strategy Kevin Yan

Cavian Liu

Petro Pan

Steven Gao Bank of China Thank you ! ! !
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