HSBC: no longer an investment bank?

HSBC sent out a press release yesterday announcing that they are
re-naming the "Corporate, Investment Banking and Markets Division".  It
will now be called "Global Banking and Markets".  Global Banking and
Markets comprises five main businesses: Global Banking, Global Markets,
Global Asset Management, Global Research and Principal Investments.

The
press release quotes CEO, Global Banking and Markets Stuart Gulliver,
as saying: "We launched our emerging markets-led and financing-focused
wholesale banking strategy in the fourth quarter of 2006 and completed
implementation over the course of 2007. Changing our name to Global
Banking and Markets does not signal a change in strategy. Rather, our
new name marks the end of the implementation of the change to our
strategy, which has been well-received by clients, staff and
shareholders. When we introduced our new strategy more than a year ago
we promised to be clearer about who we are and what we do. Our new name
is straightforward and direct and aligns with how the business is
managed."

Very good.

However, it has raised lots of questions.

For example, the bank has gone through some considerable change at the top of the Division, and this reorganisation follows a similar major reorganisation only two years ago, which also meant considerable change at the top back then.  Strikes me a bit of the Petronius Arbiters (see end note).

For
example,the five businesses: Global Banking, Global Markets, Global
Asset Management, Global Research and Principal Investments.  Note that
not one of them is called "investment banking". 

Are HSBC giving up any ambition to be an investment bank? 

After
all, they are following in the footsteps of Royal Bank of Scotland, who
also call their investment banking operations "Global Banking and
Markets".  The fact that both banks no longer refer to investment
banking means that some of us ask whether it is more indicative of
their weakness in the investment banking markets, rather than their
strength.  Certainly this is the view of Eric Knight, the activist shareholder who has claimed that this division has underperformed for the last few years.

Finally,
does it mean that HSBC no longer offer M&A, structured investment
vehicles and all that good investment banking stuff?  Hmmm, they've
certainly tried to be big in this arena, but with what success?

The
result is that most commentators are reporting that HSBC is no longer
an investment bank and, with this renaming, it would appear that HSBC
is strategically admitting it is no longer an investment bank ...

...
but then a lot of folks think they've never really been an investment
bank anyway.  They're a global bank, and so it kinda makes sense to
call the division "Global Banking and Markets" doesn't it?

Meanwhile, it did intrigue me that the "Global Markets" homepage on the HSBCnet website is nicknamed "Treasury", http://www.hsbcnet.com/hsbc/treasury, whilst the "Global Banking" homepage is "Investment", http://www.hsbcnet.com/hsbc/investment, with investment banking a subsid of this group. 

Maybe not that much has changed. 

 

 

Petronius Arbiter was a Roman satirist, who is attributed with a wonderful quotation, supposedly written in 210 B.C.:

"We
trained hard . . . but it seemed that every time we were beginning to
form up into teams we would be reorganized. I was to learn later in
life that we tend to meet any new situation by reorganizing; and a
wonderful method it can be for creating the illusion of progress while
producing confusion, inefficiency, and demoralization."

Some say however that, as this quote only started appearing in the 1970's, maybe it wasn't an orginal one after all.