HSBC Holdings plc Investor Day 2003
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Transcript of HSBC Holdings plc Investor Day 2003
Forward-looking statementsThis presentation and subsequent discussion
may contain certain forward-looking statementswith respect to the financial condition, results of
operations and business of the Group. Theseforward-looking statements represent the
Group’s expectations or beliefs concerningfuture events and involve known and unknownrisks and uncertainty that could cause actual
results, performance or events to differmaterially from those expressed or implied in
such statements. Additional detailedinformation concerning important factors that
could cause actual results to differ materially isavailable in our Annual Report.
Forward-looking statementsThis presentation and subsequent discussion
may contain certain forward-looking statementswith respect to the financial condition, results of
operations and business of the Group. Theseforward-looking statements represent the
Group’s expectations or beliefs concerningfuture events and involve known and unknownrisks and uncertainty that could cause actual
results, performance or events to differmaterially from those expressed or implied in
such statements. Additional detailedinformation concerning important factors that
could cause actual results to differ materially isavailable in our Annual Report.
Investor Day - 27 November 2003
3
Corporate, Investment Banking and Marketsgenerates over 30% of Group profits
Total Group pre-tax profits 1H2003
Corporate, InvestmentBanking & Markets
(US$2,237m)
Private Banking(US$268m)
Commercial Banking(US$1,647m)
Consumer Finance(US$649m)
Personal FinancialServices
(US$2,082m)
4%
33%
24%9%
30%
Investor Day - 27 November 2003
4
➣ Joined HSBC June 2003➣ Morgan Stanley – 23 years➣ Leader in M&A and client
relationship management➣ Excellent CEO client
relationships in Europeand Americas
➣ Built up Morgan Stanley’sInvestment BankingDivision in Europe from1984 to 1996 to top 3position
We have a strong management team ...
CIBMCo-Heads
Stuart T. Gulliver John J. Studzinski
➣ HSBC – 23 years➣ Experienced Global
Treasury & CapitalMarkets business leader
➣ Built up HSBC AsianTreasury operations tonumber one position
➣ Excellent reputation inMarkets riskmanagement
Investor Day - 27 November 2003
5
… and a management structure that recognises boththe primary and secondary markets ...
SectorManagement
CIBMCo-Heads – Stuart Gulliver and John Studzinski
Corporate andInvestment Banking Global Markets
TransactionBanking
InvestmentBanking
Credit andRelationship
LendingForeign
ExchangeSecondary
FixedIncome
EquitiesBalance
Sheet andLiquidity
Management
Derivatives
Research*
Debt andEquity
Originationand
Financing
* Managed joint by John Studzinski and Stuart Gulliver
Investor Day - 27 November 2003
6
… but our coverage model emphasises ourrelationship approach to client servicing
➣ Understanding totality ofclient requirements
Client
Relationship Management
Credit andLending
InvestmentBanking
TransactionBanking
GlobalMarkets
Greater Chinaand Asia Americas Europe and
Middle East
EmergingEurope and
Africa
BankingServices
Advisory andFinancing
RiskManagement
InvestorServices
➣ Sector based approach
➣ A full range of value addedsolutions
➣ Global / local delivery
Financing Research
Investor Day - 27 November 2003
7
Our management structure is still relatively new butevolving ...
➣ Integration of Corporate & Institutional Banking (CIB) and InvestmentBanking & Markets (IB&M) only one year ago
➣ Formation of Global Markets in November 2002
➣ Consolidation of Transaction Banking under Iain Stewart in April 2003
➣ Appointment of co-heads (Gulliver / Studzinski) in May 2003, Globalbusiness management introduced June 2003
Investor Day - 27 November 2003
8
… but we have a clear set of strategic objectives ...
➣ Build a seamless business focused on Group clients
➣ Ensure a client facing organisation, unifying and strengtheningrelationship management and origination
➣ Provide comprehensive coverage of our client base
➣ Deliver group expertise in selected global product areas
➣ Ensure credit quality, risk management tools and portfolio managementare at the heart of our business
➣ Provide a facilitating organisation structure
Investor Day - 27 November 2003
9
… and embedded principles
➣ Understanding and supporting our clients long-term financial andcommercial aspirations
• Conducting a two way global client relationship and dialogue based on integrity,trust and partnership
• Acting as a trusted industry advisor and market expert to support our clients inthe development of their business
• Providing global markets acumen, risk management and advice and marketliquidity to corporate and institutional clients worldwide
➣ Creating long term shareholder value for clients and HSBC alike
Investor Day - 27 November 2003
10
Our businesses are at different stages ofdevelopment
LoMarket ShareLo High
Rec
ogni
tion/
Prof
itabi
lity
Global Markets
High
MarketsEurope
MarketsAmerica
MarketsAsia Pacific
Investor Day - 27 November 2003
11
Our businesses are at different stages ofdevelopment
LoMarket ShareLo High
Rec
ogni
tion/
Prof
itabi
lity
High
Debt FinancingAsia Pacific
Debt FinancingAmericas
Debt FinancingEurope
Global Markets Debt Financing
Investor Day - 27 November 2003
12
Our businesses are at different stages ofdevelopment
LoMarket ShareLo High
Rec
ogni
tion/
Prof
itabi
lity
High
Global Markets Debt Financing Transaction Banking
TransactionBankingAmericas
TransactionBankingEurope
TransactionBanking Asia
Pacific
Investor Day - 27 November 2003
13
Our businesses are at different stages ofdevelopment
LoMarket ShareLo High
Rec
ogni
tion/
Prof
itabi
lity
Global Markets Transaction Banking
High
Debt Financing Credit and Lending
Credit &Lending
Asia Pacific
Credit &LendingEurope
Credit &Lending
Americas
Investor Day - 27 November 2003
14
Our businesses are at different stages ofdevelopment
LoMarket ShareLo High
Rec
ogni
tion/
Prof
itabi
lity
High
Credit and LendingGlobal Markets Transaction BankingDebt Financing Investment Banking
InvestmentBankingAmericas
InvestmentBankingEurope
InvestmentBankingAsia Pacific
Investor Day - 27 November 2003
15
… but our business goals are clear ...
CIBM Goals➣ Top Relationship Banker to largest
companies globally➣ Recognised Industry and Sector
Experts➣ Leading player in Global MarketsTransaction Banking
➣ Global Leader in Trade,Payments and CashManagement and SecuritiesServices
Credit and Lending
➣ Top 5 Banker to largestcompanies globally
➣ Optimised use of balance sheet➣ Minimised credit losses
Financing
➣ # 1 DCM Asia➣ Top 2 Syndicated Finance Asia➣ Top 3 Syndicated Finance Europe➣ Top 5 International DCM➣ Top 12 Equity linked Capital Markets
➣ Recognised Leader inprovision of sector-basedresearch
Research
Global Markets➣ Top 3 FX globally➣ Top 5 Derivatives globally➣ Top 5 Secondary debt➣ # 1 Precious Metals
➣ Asia: Top 3-5 M&A➣ Europe: Top 5-7 M&A➣ Americas: Top 7-10 M&A
Investment Banking
Investor Day - 27 November 2003
16
… and our business has strong momentumEuro Market Bonds
-2
0
2
4
6
2003 Market share
Cha
nge
in M
arke
t sha
re 0
1-03
BofA
CitiDeutsche
Morgan Stanley
JPMMerrill
CSFB
Barc Cap
UBS
HSBC
Goldmans
ABN
BNP
SocGen
+
-
Source: Bloomberg
Investor Day - 27 November 2003
17
… and our business has strong momentum
-7
-5
-3
-1
1
3
5
7
2003 Market share
Cha
nge
in M
arke
t sha
re01
-03
Asia Market Bonds
BofA
HSBC
UBS
Merrill
Citi
JPM
DeutscheMorgan Stanley
Goldmans
Barc CapCSFB
ABN
+
-
Source: Bloomberg
Investor Day - 27 November 2003
18
… and our business has strong momentum
-3
-1
1
3
2003 Market share
Cha
nge
in M
arke
t sha
re01
-03
International Bonds
BofACiti
Deutsche
Morgan Stanley
JPM
Merrill
CSFB
Barc Cap
UBS
HSBC
Goldmans
ABNBNP
SocGen
+
-
Source: Bloomberg
Investor Day - 27 November 2003
19
… and our business has strong momentum
-6
-4
-2
0
2
4
6
2003 Market share
Cha
nge
in M
arke
t sha
re01
-03
Global M&A
Deutsche
Morgan StanleyJPM
Merrill
CSFB
UBS
HSBC
Goldmans
Citi
+
-
Source: Thompson Financial
Investor Day - 27 November 2003
20
Specific plans are in place to achieve our objectives
Global ClientRelationshipManagement
➣ Implement sector segmentation
➣ Develop CIBM sector head role with defined accountability
➣ Strengthen business with high-level recruitment in key areas
➣ Produce annual plans for top clients and introduce quarterly pipeline reviews
➣ Strengthen training for relationship managers to ensure effectiveness with clients
Business Area
Investor Day - 27 November 2003
21
Specific plans are in place to achieve our objectives
GlobalTransactionBanking
Business Area
Global ClientRelationshipManagement
➣ Position Transaction Banking as a single business line
➣ Strengthen the relationship management function and actively target financial institutions
➣ Increase cross-border sales within the Commercial Banking (Middle Market) segment
➣ Enhance delivery channels
Investor Day - 27 November 2003
22
Specific plans are in place to achieve our objectives
GlobalTransactionBanking
GlobalInvestmentBanking
Business Area
Global ClientRelationshipManagement
➣ Develop global focused advisory business and establish core M&A and advisory group in US
➣ Review professional staff talent and fill key sector gaps with selective industry hires
➣ Develop competitive and retention oriented incentive schemes
Investor Day - 27 November 2003
23
Specific plans are in place to achieve our objectives
GlobalTransactionBanking
GlobalInvestmentBanking
Global Credit &Lending
Business Area
Global ClientRelationshipManagement
➣ Manage HSBC balance sheet in terms of a global service proposition
➣ Match quarterly pipeline reviews to interim and long term client plans
➣ Review professional staff talent
Investor Day - 27 November 2003
24
Specific plans are in place to achieve our objectives
GlobalTransactionBanking
GlobalInvestmentBanking
Global Credit &Lending
GlobalFinancing
Business Area
Global ClientRelationshipManagement
➣ Develop Convertibles, Term Asset-Backed Securities and Mortgage-Backed Securitiescapabilities
➣ Strengthen US proposition
Investor Day - 27 November 2003
25
Specific plans are in place to achieve our objectives
GlobalTransactionBanking
GlobalInvestmentBanking
Global Credit &Lending
GlobalFinancing
Business Area
Global ClientRelationshipManagement
Global Markets
➣ Strengthen global Currency Option capabilities➣ Develop Convertibles & Equity Derivatives product in Europe & Asia initially➣ Introduce Mortgage Backed Securities capabilities in US➣ Strengthen Corporate & Institutional Sales across all key geographies
Investor Day - 27 November 2003
26
We are rebuilding our Equities business, reshapingour existing operations to develop a client-led modelfor the new activity
Sector/ClientSelection
Market Makingand Execution Research
Retail andPrivate Banking Corporates Trading
ClientsClassical
Institutions
Investor Day - 27 November 2003
27
North America is a top market priority
➣ Strengthening Relationship Management with appointment of key sectorheads
➣ Strengthen US Debt Capital Markets platform
➣ Develop key product capabilities• Term Asset-Backed Securities• Mortgage-Backed Securities
➣ Establish core M&A and Advisory group
Investor Day - 27 November 2003
28
Achievement of our objectives is not without risk –but we are well positioned to succeed
Risk Risk Mitigation
➣ Failure to attract key industry product andregional hires
➣ A number of key hires already securedenhancing our position to attract newrecruits
➣ Short term profits squeeze as we invest forgrowth
➣ Clear timeframe and accountability forinvestment
➣ Loss of core staff to industry or competitors ➣ Strong HR emphasis to create diverse,motivated workforce
➣ Reinforced with competitive and retention-oriented compensation
Investor Day - 27 November 2003
29
HSBC is committed to a relationship driven, client facingCorporate and Investment Bank. Our core values are
integrity and trust. We understand our clients’aspirations and strategic objectives globally and
locally and create long-term value for clients and ourshareholders alike – so that when our clients do well,
we do well.